First major cableco to make the switch. The cost will be high but investors seem happy. The stock went up in a down market. I found the move particularly surprising because Altice is very heavily leveraged after paying well above market for Cablevision and others. Patrick Drahi is of the John Malone school: high leverage and risk, GAAP losses, prayer. That is working well in today's low interest environment.
Other cablecos trust DOCSIS 3.1 to remain competitive with fiber. Comcast is offering a gigabit downstream of DOCSIS 3.1 to millions of subscribers, with hundreds of megabits of DOCSIS upstream beginning in 2017. Cablevision faces Verizon FiOS, still America's best network although getting a little long in the tooth. I suspect Altice expects savings from a new, all IP network and ultimately lower operating costs. Fiber will enhance their strong share of the many businesses in Long Island. Once the decision was made to go all fiber, offering 10 gig was logical. The difference in equipment cost is small.
Liberty Global is using fiber home for as much as 2/3rds of the new homes they are passing and many other cablecos are installing more fiber. As far as I know, Altice is the first large cableco to rip out a DOCSIS network and bring in fiber home. (Calix is providing gear for some small cablecos.)
Altice wants to IPO the U.S. division, cash out a portion, and use stock to acquire more companies.
Drahi has an experienced fiber team at his Portuguese division, including an innovative research staff. It will be interesting to see his vendor choice; the U.S. is continuing the ban on most Chinese network gear, especially Huawei.
10 gig provides bragging rights but even I can't think of practical uses.
An article by Doug Dawson questioned whether Altice's claim of fiber to everyone was supportable. Lisa Anselmo of Altice confirmed what they are doing,
I am confirming that we are in fact building a full fiber-to-the-home network, leapfrogging DOCSIS 3.1
- When we say we are “extending fiber deeper” or “driving fiber deeper” it’s because we already have fiber in our existing HFC network – therefore, we will deploy fiber deeper to create our FTTH network
- I am confirming that in the 5 year timeframe we expect to reach all of our Optimum footprint and most of the Suddenlink footprint
- As for the investment, we are not breaking out the figures. But as noted in the release, we are reinvesting efficiency savings to support the buildout. Additionally, given Altice’s experience in France and Portugal in deploying FTTH networks, we have the resources and capabilities to execute against this plan.
So to reiterate – the company is building a FTTH network.
Lisa Anselmo, +1-516-803-2362
Head of Communications
Arthur Dreyfuss, +41 79 946 4931
Chief Communications Officer
Nick Brown, +41 79 720 1503
Chief Investor Relations Officer