Altice USA: Why Wireless Growth Outshines Broadband Struggles

The telecommunications landscape is undergoing a seismic shift, driven by the convergence of fixed and wireless networks. For investors, the key question is: Which companies will thrive as legacy cable models fade and mobile-first strategies rise? Altice USA (ATUS) presents a compelling case, with its Q1 2025 results underscoring a strategic pivot toward wireless growth that could redefine its valuation. While broadband subscriber losses persist, the company's rapid mobile expansion and bundling strategy position it to lead the next era of converged telecom services.

The Wireless Momentum: A Strategic Hedge Against Legacy Struggles

Altice's Q1 2025 performance highlights a stark contrast between its declining broadband business and surging wireless segment. Broadband saw a net loss of 37,000 subscribers—a reflection of industry-wide challenges post-Affordable Connectivity Program (ACP) expiration—but this decline is mitigated by two factors: improving churn rates (lowest in three years) and a sharp rise in mobile adoption. The company added 49,000 wireless lines, its strongest quarterly gain in five years, pushing total mobile subscribers past 508,000. Crucially, 6.3% of broadband customers now bundle mobile service, up from 5.7% in late 2024. This convergence is Altice's secret weapon: cross-selling services reduces customer attrition and boosts average revenue per user (ARPU).

Fiber as the Foundation: Synergies in Motion

Altice's wireless growth is underpinned by its aggressive fiber rollout—a strategic move to future-proof its network. In Q1, fiber net additions hit 69,000, a record high, with total fiber customers surpassing 607,000 (up 54% year-over-year). Fiber's dual role as a backbone for both broadband and mobile services cannot be overstated. By enabling ultra-fast speeds and low latency, fiber networks support seamless integration of fixed and wireless offerings. CEO Dennis Mathew, building on the vision of former CEO Dexter Goei, has prioritized fiber as the platform for “next-gen” telecom services, including AI-powered customer tools and hyperscaler partnerships (e.g., Lightpath's expansion into Columbus, Ohio).

Navigating Post-ACP Challenges

The ACP's expiration in late 2023 has left a gaping hole in broadband adoption, with affordability barriers forcing many low-income users to downgrade to mobile-only plans. Analysts estimate that 40% of pre-pandemic broadband net adds have vanished, and Altice's Q1 broadband losses are part of this industry-wide trend. Yet, the company is countering this by:
1. Pricing discipline: Avoiding aggressive rate hikes in competitive markets to retain customers.
2. Affordable plans: Launching low-cost broadband tiers targeting income-constrained households.
3. AI-driven efficiency: Partnering with Google Cloud to automate service management, reducing operational costs.

While net debt remains elevated at $24.9 billion, Altice's $3.4 billion 2025 Adjusted EBITDA target reflects confidence in margin improvements. Capital expenditures, focused on high-impact projects like mid-split DOCSIS upgrades and fiber expansion, are expected to total $1.2 billion—prudent spending that avoids over-leverage.

Why Investors Should Bet on Convergence

Altice's trajectory aligns with a broader telecom trend: mobile is the growth engine, while broadband remains a cash cow with declining relevance. Competitors like Verizon and AT&T are racing to acquire fiber assets or build out 5G networks, but Altice's hybrid model—combining fiber's reliability with mobile's scalability—gives it an edge. The bundling of services (e.g., fiber broadband + mobile plans) creates stickier customers and higher lifetime value.

Critics may cite Altice's $0.16 diluted net loss per share in Q1 as a red flag, but this masks operational progress. Adjusted EBITDA margins held steady at 37.1%, and free cash flow generation is improving. Meanwhile, shares trade at just 5.2x 2025 EBITDA estimates, a discount to peers like Verizon (6.8x) and AT&T (7.4x). This valuation gap could narrow as wireless momentum accelerates.

Investment Thesis: Buy Altice USA

Altice USA is at an inflection point. Its wireless growth, fiber-driven synergies, and strategic bundling are transforming it from a cable laggard into a converged telecom leader. While broadband struggles will linger, the company's focus on high-margin mobile services and network efficiency creates a compelling risk-reward profile.

Buy Recommendation:
- Price Target: $18–$20 (vs. current ~$14) based on 6.5x 2025 EBITDA.
- Catalysts: Q2 results showing sustained mobile growth, Lightpath hyperscaler wins, and debt deleveraging progress.
- Risks: Further broadband subscriber losses, regulatory headwinds, or slower-than-expected fiber adoption.

In an era where fixed and wireless networks are merging, Altice's vision—crafted by Goei and executed by Mathew—is no longer optional. It's the path to telecom dominance.