Altice USA Inc., the No. 4 US cable-TV provider, fell the most on record following disappointing third-quarter results, with management saying “higher competition” threatens its business and playing down prospects for an imminent buyout of the company.
Shares of the New York-area company fell as much as 37% to $3.94, the biggest intraday drop since the US unit of France’s Altice Europe began trading in 2017.
Cable providers like Altice have been losing TV customers to cord cutting for years. Now their broadband business — providing fast internet access — is under pressure from the sluggish economy and phone companies offering less-expensive options. Altice lost 43,000 broadband subscribers in the quarter, despite expensive investments in fiber to attract new internet customers.
In the wake of the report, several analysts lowered their ratings, and at least five cut their price targets.
The picture isn’t getting better this quarter, Chairman Dexter Goei said Wednesday on an earnings call.
“We’re still experiencing higher competition in parts of our footprint,” he said. “It’s clear that fixed wireless broadband is taking some of the growth and switchers out of the market.”
Cable giants Comcast Corp. and Charter Communications Inc. reported similar challenges last week.
For Altice, the situation is slightly more complex given the company’s splurge on fiber expansion and capital spending of up to $1.8 billion this year, Bloomberg Intelligence analyst Geetha Ranganathan wrote in a note Wednesday.
“It will take time to turn the corner,” she wrote.
Another telecom provider, Lumen Technologies Inc., was down sharply Monday after terminating its dividend and announcing a deal to sell its European businesses for $1.8 billion, freeing up funds to invest in the expansion of its US fiber operations.
A potential bright spot for Altice is the ongoing attempt to sell its Suddenlink cable business. Goei said the company could have something to announce soon. Funds from a sale would be used to further its fiber investments.
“We’re getting to a place where the decision’s pretty imminent as to whether or not we’re going to do something,” he said.
On the call, Goei was asked if taking the company private was a possibility. He said there was nothing on the table at the moment, but that could change. Altice is controlled by billionaire Patrick Drahi.
“I’m sure it will be looked at again in the future, as we continue to go through the budget process and going into 2023,” Goei said. “That’s all I could say today, and at some point in the future, maybe there’s a lot more to talk about there.” yahoo! finance