When French telecommunications company Altice acquired U.S. cable companies Cablevision and Suddenlink, Chairman Patrick Drahi made a bold statement: Altice USA would rival Comcast and Charter in size, becoming one of the three dominant U.S. cable operators.
Fast forward nearly six years, and Altice USA has about 5 million customer relationships, compared with about 31 million each for Comcast and Charter. (Altice USA did announce a $310 million acquisition of Morris Broadband on Monday, which will give it about 36,000 more customers.)
CEO Dexter Goei explained to CNBC what prevented Altice USA’s rapid expansion, why he thinks cable and wireless will eventually merge in the U.S., and why it’s only a matter of time before cable TV becomes extinct.
“Of course, I’m going to tell you what I think relative to my own book. But what’s true and continues to be true and will be true for a very long time forward is broadband connectivity. Penetration is continuing to rise, and cable companies continue to be at the forefront of dominating market share, and people are going to continue to want to upgrade their speeds and get better and better technology.”
“I think you can say that in wireless as well. But there is a big difference, which is with wireless, you’re also replacing your handset every two or three years. That’s an expensive thousand dollar purchase, if you’re buying the high end stuff. Secondly, the difference between 4G and 5G, or 3G and 4G, are not so cataclysmic that it warrants major price improvements in terms of what consumers are willing to pay. And I do think that competition in the wireless world is getting probably more competitive than less competitive, in general. ”
That growth of free cash flow and predictability of free cash flow is something quite unique. And it’s very much the cable story and the fixed line story today.
Altice USA CEO says cable TV will die and broadband and wireless companies should merge