Entering with a bang in American telecoms in the mid-2010s, Patrick Drahi dreamed of a starry adventure. The stability and margins of the cable operator business should enable it to make profitable the 27 billion dollars (25.3 billion euros) spent in 2015 and 2016 to buy, with a lot of debt, Suddenlink and Cablevision, two challengers giants Comcast and Charter. But, for a year and a half, new competition has showered its plan: in addition to the arrival of fiber optics, a technology hitherto little deployed in the United States, mobile operators, such as T-Mobile US, a subsidiary of the German Deutsche Telekom, sell Internet access via 5G, which makes it possible to cover areas that are difficult to access by wired connections.
With its derisive advertisements for Comcast and its aggressive prices, T-Mobile US launched a fierce competition in the sector, to the delight of Americans, tired of the failures of cable and its prohibitive prices. The subsidiary of Deutsche Telekom, which offers access to 50 dollars per month, an amount at least twice lower than that of a fixed cable subscription, gained 2 million subscribers in Internet access at home in 2022 , much of which was taken from its competitors. Despite a fourth quarter that was less bad than feared, Altice USA lost 134,000 residential subscribers last year, according to data released on February 22. Consequence: the annual turnover of the American operator of Patrick Drahi fell by 4.4% and its gross operating profit plunged by 12.7%. Looking at the fourth quarter alone, the numbers turn bright red, with a net loss of $193 million.
To deploy fiber optics and keep its customers, Altice USA has launched an investment plan. But this is costing it dearly: 1.9 billion dollars in 2022, 700 million more than a year earlier. And it plans to spend another 1.7 billion to 1.8 billion this year, without that being enough to quickly reverse the trend. We can expect continued pressure on results in 2023, management acknowledged at a conference. A disturbing scissor effect. Because, by earning less money, the operator has fewer means to repay his debt, even more so when interest rates rise. Debt peaked at the end of 2022 at $24.6 billion.
Stock market fall of more than 60%
To bring in cash, Altice USA tried, at the end of 2022, to resell Suddenlink. But a search for a buyer turned up nothing. Today, according to Bloomberg, Altice USA would rather seek a partner to share the costs of deploying optical fiber, as AT&T was able to do, at the end of 2022, by creating a joint company with the largest asset manager in the world, the American BlackRock.
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