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Operator: Greetings and welcome to the Altice USA First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief questions-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sarah Freedman, Investor Relations. Thank you. Sarah, you may begin.

Sarah Freedman: Hello and welcome to the Altice USA Q1 2024 Earnings Call. We are joined today by Altice USA’s Chairman and CEO, Dennis Mathew; and CFO, Marc Sirota, who together will take you through the presentation and then be available for questions. As today’s presentation may contain forward-looking statements, please carefully review the section titled Forward-Looking Statements on Slide 2. Now turning over to Dennis to begin.

Dennis Mathew: Thank you, Sarah. I’m pleased to be here with all of you to review our Q1 performance and discuss some of the opportunities we are working on for the rest of the year. In Q1, we continued to make progress on improving our financial and operational performance. Our transformation journey is well underway and I’m thrilled to report that our efforts are yielding results. To start off, I’d like to acknowledge the dedication of our teammates across the country who are working hard every day to serve our customers. Over the past year, our focus has been on investing in our teams and talent, evolving our go-to-market strategy and elevating quality across every area of our organization. We are focused on quality products, quality network and quality service.

Customers want quality and value and our teams are working hard to deliver the best quality at the best value. To that end, we are strengthening our networks, improving our execution discipline and enhancing our product portfolio to compete more effectively against existing and new market players. Our improvements across First Time Right initiatives are driving lower contact rates, fewer service visits and higher Net Promoter Scores and are evidence that we are making operational progress, which is translating into customer loyalty and sets us up for long-term growth. And our efforts have garnered recognition from independent third-parties, further validating our progress. Beginning on Slide 3, I will review some of the progress we made in Q1 against the main levers for sustainable long-term growth, which we laid out last quarter.

First, we are focused on delivering the highest-quality network experiences to our customers. Through our advanced networks, both fiber-to-the-home and hybrid-fiber-coax, our customers are receiving faster and more reliable services than ever before. We’re pleased to share that Optimum’s fiber internet network was recently recognized by Ookla Speedtest for delivering the fastest and most reliable Internet speeds in New York and New Jersey and the lowest latency across New York, New Jersey and Connecticut. In addition, Optimum received the top ISP award by CNET in eight major cities across Connecticut, New Jersey, North Carolina, Texas and Arizona. These endorsements showcase the strength of our networks. We have up to 8-gig symmetrical service over our fiber network, making us the nation’s largest provider of 8-gig speeds and 1-gig download speeds across 95% of our total footprint.

And we continue to see data consumption increasing. In Q1, the average monthly data usage of our broadband only base was over 700 gigabytes of data, which has grown 13% since Q1 of last year. Additionally, the top 10% of our residential customer base uses more than 2 terabytes of data per month. This level of growing consumption, paired with our unmatched speeds and reliability, give us confidence in our ability to compete long-term against competitors like fixed wireless. And we are expanding our network to new markets with strategic edge-outs, allowing us to leverage our nearby plant and infrastructure to increase overall returns on CapEx. For example, we recently began extending fiber to Montclair and West Orange, New Jersey using existing nodes servicing nearby markets.

We are currently selling Optimum Mobile to these communities, with plans to begin lighting up our fixed fiber network in both areas later this year. This allows us to generate additional beneficial returns with efficient CapEx. In 2024, we will add more than 175,000 additional total passings. We will deploy strong go-to-market strategies to all new homes passed with compelling promotional offers and ensure we are effectively attracting new customers and capturing material share. In Q1, we maintained our momentum in reducing service calls and visits while advancing digital and self-service solutions, and customers are noticing. The quality improvements in customer experience has led to meaningful upticks in NPS, including relationship NPS, transactional NPS and early-tenure NPS, reflecting improved customer satisfaction across the board and translating to relatively stable churn.

This is driven by a First Time Right approach. When a customer contacts us, we want to ensure their questions are resolved the very first time and we continue to track improvement on this front. We also continue to enhance our connectivity portfolio by delivering more value to our customers. Our Optimum Complete offer, which bundles broadband and mobile services, creates a unified connectivity experience that customers want. We are excited about our opportunities in mobile. Our mobile business is gross margin positive and helps us create stickier, more profitable customer relationships. And we plan to add tablets, device protection, smartwatches and more to our Optimum Mobile portfolio later this year, delivering even more value to our customers.

We continue to see video as an important product in our portfolio, and we are innovating the experience to meet the changing needs of our customers. Optimum Stream is our main set-top box across the East footprint and continues to be rolled out across the West footprint, and we’ll look to launch two new video tiers later this year to offer more entertainment optionality for video customers. Next, we prioritize customer satisfaction and loyalty through better base management, a transparent pricing strategy and offering high-quality products with exceptional value. Our base management strategy, supported by advanced data analysis, allows us to better understand and anticipate customer needs, fostering deeper engagement and satisfaction. In Q1, we introduced everyday pricing as our new rack rates, which reduces our back book pricing and creates a clear, simple and transparent pricing journey for each customer.

This strategy is enhancing our rate events and promotional roll-off process, leading to increased value and customer retention, and our customers are responding. We are seeing less ARPU erosion and stable customer churn trends, particularly at the time of promotional roll-offs. Combined with advanced retention tools that we’ve deployed to our care centers, we are able to look at the customers’ lifetime value and provide offers specific to that customer to maximize save rates while also improving profitability. This includes speed rightsizing, offering mobile, video package optimization and much more. We recently launched our new brand platform with modern and fresh marketing, which highlights our segmented go-to-market approach. The platform, where local is big time, centers on our ability to bring customers and communities the reach and connectivity resources of a large national provider with the familiarity, connection and localized attention of a small business.

Our brand platform leverages the regional leadership structure we announced last year. We are able to compete town by town, neighborhood by neighborhood, house by house. With a granular view of each service area, we can tailor marketing, services and offers at a hyperlocal level. We have three main objectives with our new marketing platform. To deepen trust in the communities we serve, to attract and retain customers and to strengthen our overall brand, driving business results. In addition, we’re going on the offensive with our marketing in highly competitive areas and directly highlighting our superior value and quality product set compared to competitors. We have also made strong progress on increasing penetration on our fiber network, which will remain a focus for us this year.

We closed the quarter with over 14% penetration on our fiber network, a marked increase from under 9% in Q1 of the previous year. As I mentioned on our last earnings call, we are improving our fiber migration and installation processes. And our customers are already seeing improvements in the fiber experience. As such, we will thoughtfully offer more migrations of our existing customers to fiber as well as add new customers directly to fiber in our footprint to leverage our existing investments. And last we are encouraged by the opportunities in B2B across our entire footprint. With a focus on better base management and sales execution, our Business Services revenue grew modestly in Q1 ’24 year-over-year. This is a notable improvement from the trend in Q1 of the prior year, which was down approximately 1% on a year-over-year basis.

In Q1, we launched Optimum Mobile for B2B, which will add to mobile growth over the course of the year. We also have plans to launch new managed services, including wireless backup and recovery, cybersecurity solutions, unified communication services and more for our business customers. We are just getting started on providing a more robust product portfolio for businesses across our footprint and I’m optimistic about the impact on our business long-term. Before we move on to the next slide, it’s important to recognize the impact of the current macro environment we are operating in. Although we have made significant improvements in our operations, we, along with our peers, faced challenges due to the difficult macroeconomic conditions. As we start 2024, consumers are facing continued financial stresses.

Household mobility remains low, particularly in New York tri-state area. Housing starts in March decreased by more than 30% in this region, where we have a significant presence. Additionally, we see continued competitive pressure in the West from new fiber entrants into traditional DSL markets, moderating the growth we would typically achieve. As we look at how we are competing against fiber overbuilders over time, our trends are stable. When an overbuilder launches, their initial penetration ramp levels off after a period, which proves that we can compete well over time. These consumer factors are affecting the number and timing of connects and nonpays, which is reflected in our net add activity in Q1. Our go-forward performance will continue to be affected by the competitive landscape and the timing of market recovery.

Despite the current market headwinds, we are encouraged by key metrics, which show that our underlying business is healthy. We are stabilizing Residential ARPU. Churn rates remain low. NPS metrics continue to improve and our sales channel yields and productivity are increasing. We have the right strategy in place with a disciplined approach and a focus on profitability which positions us on the path to sustainable long-term growth. In 2024, we’ll remain focused on driving profitable customer relationships, elevating network, product and service quality and executing with discipline. We are accelerating our local go-to-market strategies, evolving our product portfolio and driving enhanced base management and pricing strategies, all while maintaining financial discipline.

As we look ahead to the remainder of the year, there is a lot to be optimistic about. We are well positioned to continue to drive our transformation journey, remaining confident that our strategy is yielding positive results. With that I’ll now hand it over to Marc to review our Q1 performance in more detail.

Marc Sirota: Thank you, Dennis. Turning to Slide 4. I would like to begin with an overview of how we are maximizing profitability in our customer base. If we look at the profitability of each individual customer, which includes recurring revenue, direct cost and the total cost to serve each customer from sales acquisition costs to total customer contact rates. This allows us to focus on the value of each customer from a profitability standpoint, not just ARPU. We have a long tenured base, which supports our strong Residential ARPU of over $135. Approximately 60% of our customers have been with us for five years or more and approximately half of those customers have been with us for 10 years or more. We have runway to improve ARPU trends as we minimize overall churn, remain disciplined on acquisition and retention offers, sell in higher-speed tiers and offer additional products like mobile.

As we streamline our base management programs to enhance long-term value and focus on profitable growth, it’s important to recognize that this has and may lead to disconnect volumes. We did see a slight uptick in disconnects in the first quarter with this new disciplined approach. We are ensuring our offers across all channels optimize conversion and save rates while we’re remaining competitive in each market. This aligns with our segmented go-to-market approach, moving away from a one-size-fits-all strategy. Instead, we adjust our approach based on the competition to maximize both subscriber trends and profitability. This level of focus has enabled us to begin stabilizing Residential customer ARPU trends. Despite facing headwinds from ongoing loss of video customers, we have successfully mitigated ARPU declines by increasing mobile penetration, maintaining stable churn and integrating AI and advanced data analysis into our sales, care and retention centers.

In Q1, Residential ARPU grew $0.35 or up 30 basis points year-over-year. This is the second quarter in a row we reported ARPU growth year-over-year. Residential ARPU trends are likely to fluctuate throughout the year. We expect ARPU trends for the full year to be moderately better than the year-over-year decline in 2023 of 1.5%. Total revenue declined 1.9% year-over-year to approximately $2.3 billion, a marked improvement from Q1 of 2023, which was down 5.3%. In Q1, Residential revenue declined 2.9%, driven by a lower subscriber base and an increase in video customer losses in the quarter. Business Services revenue grew 0.3%, which is supported by growth in the Lightpath business of 3.6% and a 0.8% decline in SMB and other. News and Advertising grew 7.1% in the quarter, driven by higher political revenue.

Excluding political, News and Advertising revenue saw an underlying growth of 1.8%, and political revenue will become more of a tailwind in the back half of this year. Slide 5 is an overview of how we’re improving our go-to-market strategy, enhancing base management and continuing to simplify customer interactions. Last year, we rolled out a regional market structure, dividing our footprint into distinct regions with localized teams overseen by dedicated regional general managers. We have improved collaboration across teams, which has strengthened our local execution from marketing to pricing to customer experience. We are communicating the specific needs in each community and acting quickly to respond to evolving customer demands. At the heart of our enhanced base management strategy is our commitment to providing quality and value, as Dennis referenced in his opening remarks.

As of Q1, we rightsized speeds for almost 300,000 customers, primarily those on historically low-speed tiers, and have plans to rightsize another 100,000 customers in Q2. A meaningful portion of our speed rightsizing efforts is geared towards moving customers off of legacy speeds and onto our current speed tiers. This provides customers with faster speeds at a better value and drives loyalty while leaving plenty of runway to sell in higher speeds. This also allows us to retire old speed tiers and create more operational efficiency. To support this strategy, we are committed to bringing innovation to every aspect of our operations, including introducing new tools to support our field, care and inbound channels as well as innovative AI solutions to enhance our marketing and customer relationship management.

And on customer experience, we continue to see underlying metrics moving in the right direction. The rate at which customers call into our call centers continues to decline as we are more proactively and clearly communicating with our base, launching easy-to-use self-service options and improving our operations, giving customers fewer reasons to pick up the phone. Truck rolls or service visits continue to come down as we have implemented better tools to detect network issues and we continue to invest in enhancing our network to deliver seamless and reliable connectivity. These improvements are driven by a First Time Right approach to achieve resolution at the first point of contact, a metric that continues to improve every quarter. Next, on Slide 6, I’d like to review our adjusted EBITDA trends and free cash flow generation.

Q1 adjusted EBITDA margin is 37.6%. As you recall, Q1 is typically a low point in our quarterly margin trends as we have more programming resets. And specifically, this year, we have additional expenses related to the timing of OpEx and transformational expenses in the quarter. Total adjusted EBITDA was down 2.5% to approximately $847 million in Q1 as we made steady progress towards EBITDA stabilization. This marks a significant improvement from Q1 of the previous year, which declined over 12% year-over-year. The 2.5% decline in adjusted EBITDA for first quarter is primarily attributable to a low single-digit revenue decline, incremental sales and marketing expenses associated with the launch of a new brand platform and transformational expenses related to third-party consultants and partners.

In Q1, we generated positive free cash flow of approximately $64 million compared to negative $166 million in the first quarter of the prior year. This was driven by lower capital spend in the first quarter of $336 million, partially offset by lower adjusted EBITDA. In Q1, excluding cash impacts from restructuring, free cash flow would have been approximately $84 million for the quarter. Next, on Slide 7, I will review our quarterly subscriber trends. During Q1, we added 53,000 new fiber customers through a combination of new customer acquisitions and migrations of existing customers. We ended Q1 with 395,000 customers on fiber. Our momentum with the fiber customer base continues to accelerate, growing 1.4 times faster compared to the pace observed in quarter one of 2023.

Notably, our strategy has evolved, with shifts towards migrations contributing to a larger share of our fiber net additions. In Q1, migrations accounted for approximately 70% of our fiber net adds and 30% from net new customers. This shift is a result of improvements in the migration progress in our overall high product performance. On mobile, we added 29,000 new mobile lines, a 3.8 times acceleration in pace compared to Q1 of last year. We continue to market Optimum Complete, a compelling bundle offer, and have greater emphasis on mobile in our sales channels. We are also selling mobile in retention and care and these sales channels are continuing to gain momentum. Broadband net losses are 30,000 for the first quarter as we continue to operate in a sustained competitive market.

Against a challenging macro backdrop, as Dennis mentioned earlier, we faced continued headwinds, including less calls into our sales channels and less shoppers online in Q1. We continue to see headwinds in Q2, which is also typically a seasonally weaker quarter due to the impact from university disconnects in our West footprint. Despite these factors, we have the right strategy in place. We are focused on profitable growth, financial discipline and enhancing the customer experience with a segmented go-to-market approach, which positions us on a path for sustainable long-term growth. I would like to give an update on how we will address our customers who participate in the federal Affordable Connectivity Program, for which funding is expected to include in mid-May.

We ended Q1 with 130,000 ACP customers, which is less than 3% of our base. As the program is likely to wind down, we have implemented a strategy to retain ACP customers and have assigned dedicated and specialized retention agents. These teams are equipped with new AI-powered tools to provide customized offers and solutions to each customer based on usage and needs. This includes mobile, speed rightsizing, Optimum Stream and more. They have the ability to repackage customers into price saving offers, such as Optimum Complete, to receive discounts by bundling Internet plus mobile or move into our income constrained products for qualified customers such as our 100-meg product for just $25 a month. A percentage of our base who were on ACP is relatively low and the majority of those were existing customers before the program.

With this strategy in place, we have meaningful ability to retain our ACP base as the programs wind down. As we look at the value across our connectivity portfolio, we have numerous opportunities to further expand and enhance our customer relationships. A prime example of this is our mobile business, which I will review on Slide 8. Mobile serves a key connectivity solution within our business, enabling us to extend connectivity to our customers beyond their homes and offer substantial potential for scalability, improved profitability and support for broadband and business trends. In Q1, we grew mobile ARPU by $4.30 year-over-year. Our mobile service, backed by the largest 5G provider in the country, positions us to unlock more value in mobile, supported by our Optimum Complete bundle, offered at attractive prices.

And when customers take mobile in addition to broadband, we see over 20% reduction in annualized churn compared to customers who just take broadband service. This causes a lot of opportunity to reduce overall customer churn as we grow penetration of mobile in our base as well as drive customer profitability. Mobile customer penetration of our total broadband base at the end of Q1 is 5.3%. We have increased penetration almost two percentage points in the past year, and we have a lot more opportunity to grow on this front. We continue to see our mobile customer base opting for unlimited mobile plans versus by the gig, with almost two-thirds of our mobile base on an unlimited or unlimited max plan. And there is more opportunity to continue to shift our mobile base towards these unlimited plans.

As Dennis mentioned, we launched mobile for B2B, and we are looking to expanding our mobile portfolio by adding tablets, device protection, smartwatches and wearables and accessories in our e-com channels later this year. Overall, we have a lot more to come on mobile. And we are optimistic about the trajectory of this business. Next, on Slide 9, I’d like to review our network strategy, continued fiber investments and capital spend. We constructed an additional 45,000 fiber passings in Q1, ending the quarter with 2.8 million fiber passings. We’ll reiterate our year-end target for fiber passings to reach 3 million. We said we would focus on driving more penetration to our fiber network, and we are doing just that. Our focus on fiber penetration will unlock additional benefits as we move more customers onto this incredible network.

Better gross add ARPU, faster speeds, better churn rates, lower maintenance costs will enable us to realize faster returns on this best-in-class network investment. We ended Q1 with over 14% penetration of our fiber network and grew our fiber customer base by almost 90% year-over-year. As I mentioned, we have identified and improved operational — operations around order entry and provisioning, the quality of our field operations and enhancing post-installation product experiences. We are already seeing the benefits, with notable improvements in completion rates and customer satisfaction. Additional improvements will be implemented in Q2, which gives us the confidence in our ability to further accelerate fiber additions in the second half of this year.

And we continue to make strategic investments across our entire footprint, including edging out and enhancing our network performance and upgrading portions of the West footprint that were not yet on DOCSIS 3.1. We will have nearly 100% of the West upgraded to DOCSIS 3.1 by year-end. In Q1, we added 51,000 total passings to our footprint and expect to deliver more than 175,000 in the full year through both edge-out and new build construction. In Q1, our capital spend decreased 42% year-over-year to approximately $336 million, with capital intensity just under 15%. Compared to Q1 of last year, capital intensity is about 10 points lower due to the timing of spend and more discipline around capital intensity. We continue to guide to a full year capital expenditure of $1.6 billion to $1.7 billion for 2024 as we make strategic investments to enhance our network and products to deliver sustainable long-term growth.

And finally, on Slide 10, I’d like to review our debt capitalization. As a reminder, in January, we issued approximately $2 billion of senior guaranteed notes due to January 2029, at a rate of 11.75%, to pay down the outstanding Term Loan B and Incremental Term Loan B-3, which are due in 2025 and 2026. In conjunction with this transaction, in February, we paid down in full the senior notes due in June of 2024, with a $750 million draw on our revolving credit facility, for which we had previously earmarked capacity. These two refinancing activities successfully cleared out near-term maturities until 2027, giving us the runway to continue to operate and drive the business toward growth. At the end of Q1, our weighted average cost of debt is 6.5%, and our weighted average life is 4.8 years.

Our fixed rate of total debt is 86%, inclusive of floating to fixed interest rate swaps. Our leverage ratio was seven times the last two quarters’ annualized adjusted EBITDA. We will continue to be proactive in managing our debt maturities and evaluate how best to ensure that our capital structure supports our long-term operating goals. While we are well positioned in the near term, we are looking at all options to maintain a capital structure that supports our long-term strategic objectives. In conclusion, we have the right strategy in place, with a focus on profitability, financial discipline and enhancing the customer experience with a segmented go-to-market approach, which positions us on a path to sustainable long-term growth. With that, we’ll now take any questions.

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from Kutgun Maral with Evercore ISI. Please proceed with your question.

Kutgun Maral: Good morning and thanks for taking the questions. I was hoping you could unpack the competitive backdrop across broadband a bit more and perhaps what you’re seeing into the second quarter beyond typical seasonality. Dennis, you called out stable trends against fiber overbuilders, which is encouraging. Any sense on whether the case of overbuild activity has changed across your footprint? And are you seeing any notable shifts across fixed wireless? We’ve seen some growth moderate across certain fixed wireless operators, so that seems to be offset by the rollout of AT&T’s Internet Air. I’m not really sure how that plays across your footprint. So any help would be appreciated. Thank you.

Dennis Mathew: Hi, Kutgun, happy to address these topics. On the competitive front, we’ve got a little bit of a different composition across the East versus the West. I am very happy with the trends, particularly from a churn perspective. As I look at where we are, we’ve really done an incredible job as a team to stabilize churn, particularly in the East. And so we’re really focused on continuing to drive gross adds and top of the funnel. As I mentioned, we have a lot of headwinds to work through. With interest rates where they are and mortgage rates at 23-year highs — near highs and housing starts being down 30% in the Northeast, there are just less jump balls, less calls coming into the call center, less shoppers online. We’re seeing Verizon go hard after the lower end of the market, both with their offers, $30 offers to 300 meg.

They’ve now launched their fixed wireless solution. So there is a bit more amplification and competition at that lower end. I am happy to say that I’m seeing our win share stabilize against fixed wireless generally and some of our local go-to-market strategies are really helping us compete more effectively. When I look at the West, we are continuing to see build, absolutely. 200,000 overbuild passings in the second half of last year. And we do see these folks coming in and taking some share upon initial launch, which is not surprising, but our ability to compete is really improving. And we’re starting to see actually our ability over time to compete and improve every day, every week. We’re finding customers now starting to come back as they’re dissatisfied with the quality of service.

They’re dissatisfied with the hidden fees. We are more present than ever. We’re delivering better quality, quality products, quality network, quality service. People want quality and value, and that is what we are committed to delivering, which is evidenced by the awards from Ookla and from CNET. And we’re really focused on profitable growth as we move forward as well. And so we are really becoming — we’ve really implemented some nice discipline on our go-to-market acquisition offers as well as in our retention. And so the competition is fiercer than ever, but our ability to compete continues to improve every day.

Kutgun Maral: Understood. Thank you for the color.

Dennis Mathew: Absolutely.

Operator: Our next question is from Greg Williams with TD Cowen. Please proceed with your question.

Gregory Williams: Great. Thanks for taking my questions. You guys noted for the past two quarters now you’re focused on cyber migration. So I was curious if you had a percentage of what your adds were on the fiber side. How many came from HFC migrations versus new to Altice? I think in the past, you said it was 50-50. And I’m wondering if that’s shifting. And also just general color on EBITDA trends for the balance of the year. You’ve had some OpEx investments and seasonality in the first quarter. Just wanted to see how that shakes out through the remaining three quarters. Thanks.

Dennis Mathew: Thanks, Greg. Our fiber migration processes are improving by the day. In this past quarter, we actually had 70% of our adds — fiber adds come from migrations. As I mentioned on the last couple of calls, there’s a whole host of process and technology improvements that the teams are working hard on, and we’re starting to see those improvements deliver results. And we have a whole host of additional technology improvements coming towards the middle of May. So I imagine we’ll be a bit flattish in terms of Q2 fiber migration performance, and then we want to really hit the accelerator as we move into the second half of the year. And our customers are already telling us that they are experiencing the improvements with improved NPS and customer satisfaction.

Our teammates are also sharing, we’re now seeing in pockets an ability to deliver 90% completion upon fiber migration and some marked improvement from mid to low 70s just a few months ago. And so I’m very optimistic that we’re going to be able to have a step function change in terms of acceleration of migrations as we move into the second half. Marc, I’ll throw it over to you to talk a bit about our EBITDA.

Marc Sirota: Yes. Greg, on EBITDA trends, as we’ve mentioned before, prior year subscriber losses will continue to weigh on current year results. We’re optimistic about the improvements we’re making that we talked about on the call. We’re transforming literally every aspect of this business, and we think that we’ll — fundamentally, we’ll be able to grow EBITDA over the long-term. We’re acting with discipline on OpEx. And we feel like we have the runway to continue to sustain EBITDA growth for the long-term.

Gregory Williams: Got it. Thank you.

Operator: Our next question is from Jonathan Chaplin with New Street. Please proceed with your question.

Jonathan Chaplin: Thanks, guys. I’ve got a question or really a couple of questions on ARPU. Marc, I think you said you expected ARPU to improve from last year. Was that for Residential ARPU or for broadband ARPU or both? And then I’m just wondering, with the new pricing plans that you put into effect, clearly, they’re having a benefit in helping stabilize churn. But when do you think you’ll get to a point of ARPU stability? Could that happen at some point this year? Or is it more likely next year? Thank you.

Marc Sirota: Jonathan, yes, on ARPU, we do look at ARPU holistically because there’s a little bit of fair market allocation between the product line. So our focus fundamentally is on the overall Residential ARPU. And as you’ve seen, we’re pleased with the stabilization of ARPU, especially over the past three quarters, really erasing significant declines that we previously experienced. And so just note, as we’ve talked about previously, video losses will continue to weigh on ARPU declines, but we’re offsetting these — that exposure would mean just more discipline around price, with retention, around gross add acquisition offers, selling incremental services like mobile. And we’re passing on more of the programming costs to our customers as well.

And then really just excited about how we’re leveraging advanced analytics and AI tools with our frontline employees to help them guide each and every individual customer interaction. So we feel like we have a real path to sustain a balanced approach on ARPU, and we’re optimistic around that.

Jonathan Chaplin: Okay. Thank you.

Operator: Our next question is from Jessica Reif Ehrlich with Bank of America. Please proceed with your question.

Jessica Reif Cohen: Thanks. I have a question on video and question on advertising. On video, can you talk about like efforts to keep programming cost per sub down? And maybe some color on, Dennis said, more optionality for video packages. This is still video, but it looks like for the first time, I think, ever, we’re starting to see cable overbuilding each other. Can you talk about what strategies you’re employing to differentiate? Anything you can say on the overbuilding for cable. And then just advertising quickly, your numbers were really strong, even without political. Can you give us some color on where that’s coming from and progress in advertising initiatives? Thank you.

Dennis Mathew: Hi, Jessica, I’ll talk a little bit about video and the overbuild strategy. And then, Marc, if you want to talk about advertising. But on the video programming costs, I’m really proud of the team and the way we’re working together better than ever and our Head of Programming, working across with our finance organizations to really leverage data in ways that we’ve never done before to be able to go into these conversations much more informed. And so we’re continuing to drive down programming cost inflation per sub and really having open honest conversations about how broken the model is. As we know — as we all know, linear video viewing is at all-time lows. Costs are at all-time highs. Direct-to-consumer option availability is at all-time highs.

We continue to package in content that folks have no interest in watching. And so those are the conversations we’re having. We’re putting the customer at the forefront and having these conversations in a way that we’re hoping ultimately become a win-win, and those conversations continue. And as we have those discussions, the team is now working on some new video packages, as I mentioned, which I think will provide just some more optionality for customers. We have more work to do in the second quarter to really finalize the content and pricing and go-to-market strategy, but I’m confident it will just provide more optionality for customers in the second half of the year. And we want to be able to provide products that allow customers to watch what they want, when they want it.

And so our new stream box, which is an Android-based box, we’ve launched it across the East footprint. We’re now launching it across the West, and that will allow customers to watch linear video as well as direct-to-consumer options. And also we are making this box self-installable so that folks can install it themselves and have it up and running in a very simple way. So we’re excited about — video continues to be important in the portfolio. And video is the number one thing that people do on our connectivity solutions, and we’re working hard to make sure that we provide the best options to our customers. From an overbuild perspective, especially as we look at places like Montclair and West Orange, we have facilities that are very close by.

And so it allows us to deploy capital and build in a very efficient manner. And we’re excited to bring our incredible products to these customers, 8-gig symmetrical speeds, our stream box, our Optimum Complete solutions. We have an opportunity to bring the fastest, most reliable Internet to these customers. And we think that we can provide these customers with great products, great quality, great value, and we’re continuing to look at every opportunity. The way that we’re expanding and driving new build, we’re transforming the way we’ve done it in the past. And we’re looking at all of these opportunities with a new lens and a new financial discipline. Marc, do you want to talk about advertising?

Marc Sirota: Yes, Jessica, on advertising, we are very pleased. The sales channels are operating at the highest levels. And what we’re really encouraged by is the partnership now that’s forming between our ad sales and our B2B sales organizations. We think that actually accelerates growth even further. And we’re making strategic investments in our advanced advertising platforms, which I think is setting us apart from the rest. So we’re very pleased on the path we’re on. And as you mentioned, we see political as a nice tailwind as we enter into the second half of this year. So optimistic around our News and Advertising business.

Operator: Our next question is from Frank Louthan with Raymond James. Please proceed with your question.

Frank Louthan: Great. Thank you. On the wireless, good progress getting the gross margin positive. How long can we reach a scale to get to approach something close to your breakeven on EBITDA? And what is the goal there? And as you see — we generally see across the board with pricing for broadband, some of your competitors obviously — some of your peers taking pricing up, and we see a lot of the fiber overbuilders and the telcos taking pricing up. At what point do you think you have opportunity there to participate in some of that upward price movement we see across the industry? Thanks.

Dennis Mathew: Hey, Frank, I’ll talk a bit about the wireless mobile strategy. And Marc, if you want to chime in at all on the financials and happy to talk about our pricing strategy generally. But we’re very pleased with mobile. We continue to see really strong performance and we’re still in the early days, 3.8x improvement year-over-year. And really the channels are just starting to get into a rhythm. We’ve launched some new channels in the last few months, and they’re starting to come online and perform like our care and retention teams now selling mobile as well. We’ve transformed our retail centers into mobile sales centers. And we’re continuing to operate and sell in ways that we’ve never done. And we’re focused on quality.

We’ve seen a $4 improvement in ARPU. We’re selling in unlimited, and we’re just continuing to drive attach across the board in lines. And so we’re really pleased with the mobile and the opportunity. We’re going to continue to drive mobile in B2B as well. We just launched that recently, and we’re excited for the growth and, particularly, the churn benefits. We’re already seeing 20% benefit to our customers when taking mobile. And so this is going to — this is a core part of our portfolio. We have more work to do. We have more products to launch. We have watches and tablets and others coming later this year. And we’re going to continue to drive profitability as well as we start to look at other products later in the year and focus on insurance and accessories.

We’re very happy with where we are, and we’re confident that we can get to a pacing in line with peers in our industry.

Marc Sirota: Frank, on pricing, again, we’re pleased with the stabilization that you see in our overall ARPU rates. And again, we’re doing that in a multifaceted way. We’re focused on being disciplined around price, both in retention and acquisition. We’re selling in incremental services and certainly trying to drive more mobile and just being disciplined on the video side of the house. And so we feel like there is a path from our sustained ARPU growth. We think we’ll do slightly better than what we saw last year. And, yes, we’re pleased on our trajectory in the way we’ve been able to kind of moderate and stabilize ARPU. And certainly we’ll look at the holistic book of business around when we take and how we take price increases. But we’re doing it in just more of a scientific manner at this point, but we feel like we’re on a nice path to sustain growth.

Frank Louthan: All right. Great. Thank you very much.

Operator: Thank you. Our next question is from Sebastiano Petti with JPMorgan. Please proceed with your question.

Sebastiano Petti: Hi. Thank you for taking the question. I was wondering if you could update us perhaps on what you’re seeing from the pace of incremental build in terms of fiber, both in the East and in the Western markets. Obviously, in the East, you have fiber. It’s a bit more mature, but they continue to expand somewhat incrementally. But Frontier, I think, has put out a target about the amount of net new locations they plan to fiberize in Connecticut over time. So any change there? And then in the West, obviously, you called out incremental overbuilders and legacy or traditional DSL markets. Has that pace slowed? Have you seen anything from some of the open access announcements we’ve also seen as well? And while — and maybe you can give us an update on where do you think fiber overlap, what the terminal penetration is perhaps in the Western markets. I think in the past Altice did talk about that. Thank you.

Dennis Mathew: Hey, Sebastiano, we see the pace remaining fairly consistent, honestly, across the East and the West. As we know, there’s been a faster pace in the West. I mentioned we’ve seen about 200,000 incremental overbuild in the second half of last year. We continue to see Verizon and Frontier edge out at the paces that they’ve been edging out in the past. All that being said, our ability to continue to compete at a hyperlocal level continues to progress. That’s why I’m so excited about the new brand platform that we’ve launched as well as these new local go-to-market playbooks. And ultimately I believe we have the right products and the right portfolio and offers to be able to compete. We do see, as I mentioned, in the West, in particular, as some folks launch into some of these markets that were DSL markets starting to take some share, but then we’re able to compete very effectively after that initial launch.

And so that’s what we’re focused on, controlling what we can control. We continue to see sales channels improving in productivity and in yield. We continue to see churn stabilize as we continue to deliver quality, quality network and service and experience and products. And so that’s our focus and we’re continuing to expand our footprint as well and continuing to drive. We operate in four of the fastest growing cities in the country, four of the top 16. All of those are in the West. And we’re bringing a new level of discipline in terms of how we drive our own overbuild and new build, which will help us continue to grow from a footprint and a subscriber perspective as well.

Sebastiano Petti: If I could quickly follow up. You kind of alluded to it somewhat in discussing your network expansion efforts. But I think a key debate from — in the investment community is the ability for cable providers to improve — inflect and improve the trajectory of gross additions. I mean how do you — how are you thinking about that? I mean do you see this FWA competition and maybe some of the incremental fiber overlap? As the pace of that abates then perhaps Altice USA should think about or project an inflection within gross additions? Or is it more on a churn environment or on a churn basis where you see the growth algorithm on broadband subscribers being driven more so by retention and slowing attrition rates?

Dennis Mathew: I think it’s absolutely both. It’s absolutely both. I mean, for us, on churn, our levels are best in the industry. And that being said, we’re in a new environment, and we need to be better. And so we’re going to drive a level of quality and excellence in operating and continue to focus on leveraging tools and analytics to be able to perform with even more precision. So we need to continue to improve. On the gross adds, we’re a bit different in the — than the industry because we’re in a transformation mode. So we brought on a brand-new Chief Marketing Officer, Jen Garrett, at the end of last year. She’s transforming her team. And then we brought on a new agency of record. And so I absolutely believe that there are — there is an opportunity for us to perform at a higher gear from a gross add, top-of-the-funnel perspective.

And so we are coming at it from both angles, and we will bend the curve on both ends of the spectrum. And the hyperlocal playbooks, to be quite frank, we were historically on our — reactive at best. And we are going on the offensive. And as you think about how we compete, we have to compete at a hyperlocal level at the town level based on the competitive landscape, which we have not done before. We’ve put in a new leadership structure, our OMS structure, Optimum Market Structure, to allow us to compete at a much more effective level locally. And you’ll see that in our new marketing, where we are competing at the town-by-town level in our marketing. And I’m confident that, that is going to start to translate as we — into gross additions as we move into the year.

Sebastiano Petti: Great. Thank you for the color.

Operator: Thank you. Our next question is from Arun Seshadri with BNP Paribas. Please proceed with your question.

Arun Seshadri: Yes, hi. Thanks for taking my question. Just one from me. I guess the bond price performance in the last few weeks appears to have been impacted by general concerns around the capital structure. I guess given prices of your debt, it seems to open the door for deleveraging via discount capture. Is that something you’re looking at? I think the commentary that you made, Marc, earlier on, in the call seems to have added a line regarding all options to maintain a viable capital structure. I don’t know if I imagined that, but just any thoughts on either of those would be helpful. Thanks.

Marc Sirota: Yes. Arun, as we said before, our focus is operating the business and getting back to sustainable long-term subscriber, EBITDA and free cash flow growth. Certainly, clearing out the near-term maturities in the beginning of the year has given us runway. But as we also talked about, the interest rates remain high and move activity remains low. Consumer spending is pressured and we face sustained high competition. So as we position the business for the long-term, we need to be proactively managing our capital against the current environment. To that end, we’re well positioned in the near term, but we are looking at all options to address our debt maturity profile and maintain a capital structure that best supports our long-term strategic objectives. Beyond that, we have nothing further to share. But of course, we’ll update the market as required if and when we have something to announce.

Operator: Thank you. There are no further questions at this time. I’d like to hand the floor back over to Sarah Freedman for any closing comments.

Sarah Freedman: Thank you all for joining. Please reach out to Investor Relations with any additional questions.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.