Altice USA (ATUS) 2Q25: Landmark LME?
Davis Hebert, CFA - Co-Head HY Research, Head of Telecom/Media, CreditSights
Savannah Buzzeo - Analyst, Telecom/Media, CreditSights
8 August 2025
Insights into Altice USA’s second-quarter 2025 performance and capital structure developments, including:
- Quarterly Financial Performance: Review key revenue, EBITDA, and segment trends for Altice USA in Q2 2025.
- Subscriber and Product Trends: Discover changes in broadband, video, voice, mobile, and news & advertising customer metrics.
- Capital Structure Initiatives: Learn about the asset-backed securities private placement and its impact on Altice USA’s financing approach.
- Leverage and Debt Profile: Explore the company’s leverage trajectory, debt maturities, and possible strategies related to liability management exercises.
- Operational and Market Landscape: Get an overview of competitive market factors, ongoing investments in fiber and network upgrades, and business transformation efforts.
Executive Summary
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Financial metrics below expectations. Altice USA reported 2Q revenue of $2.15 billion, down 4% YoY and below our $2.17 billion estimate. Altice saw declines in broadband (-3% and in line), video (-11%), voice (-10%) and business services (-2%), all of which more than offset a 13% increase in News & Advertising (+13%, helped by political in NY) and 37% growth in mobile (off a low base). The lower revenue was primarily driven by subscriber losses, as a well as a 2% reduction in B2C ARPU to $134 (mostly due to video). Adjusted EBITDA was $804 million, down 7% YoY and below our $815 million expectation, primarily due to the pressure in revenue, as well as higher costs related to the integration of new AI tools and “transformation” costs.
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ATUS continues to struggle with customer losses. In 2Q, ATUS lost 43k residential customers and 35k residential broadband subscribers, slightly better than our 40k loss expectation and versus 1Q (-37k). Management says that it delivered its best net add quarter in Optimum East (NYC footprint) in 10 quarters and had fewer seasonal disconnects in the West. The company saw both lower churn and a moderation in gross add pressure and also noted a 10% sales volume increase in the value end of the chain and net positive adds in the MDU footprint. Although management had a long list of positives, the fact is that broadband losses are only modestly better and CEO Dennis Mathew acknowledged that the competition remains “fierce” across its footprint.
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Capex guidance reiterated. Altice passes ~3 million locations with fiber (out of a total of 9.9 million passings) and added 29k new residential fiber locations in 2Q. In FY24, capex came in at $1.4 billion, which was below the company’s $1.5 billion guidance, and management reiterated guidance for capex in 2025 of $1.2 billion (lowered last quarter from $1.3 billion). ATUS’ fiber investment is now targeted more on new footprint versus fiber overbuilds, while it will focus more on lower-cost HFC upgrades (slightly more than $100 per passing) to expand multi-gig capacity across the legacy footprint.
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Relative Value
Long-end CSCHLD bonds take leg lower on “ABS” news. CSCHLD bonds are mostly lower following the company’s announcement of a $1 billion “ABS” capital raise (we use quotes since we view it more as a private placement). The long-end guaranteed notes are down about 4-5 pts, while the unsecured bonds are off by 6-7 pts. The front end has largely remained firm, with 2027 and 2028 maturities all still in positive total return territory in 2025. On the surface, the ABS news was credit negative, in that the structure loses collateral but retains optionality on LME. We believe discount extraction is critical for Patrick Drahi to find a more sustainable capital structure, with competitive intensity rising, limited EBITDA growth and immaterial FCF. YTD, Lightpath bonds, meanwhile, are up 8%-10%, as the debt likely gets fully repaid with ABS proceeds at the Lighpath silo.
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