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TSOH Investment Research's avatar

Good update, thank you Matt.

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Perpetual Investing's avatar

Thanks for reading Alex, appreciate the comment - learn a lot from your the work you put out!

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Roman's avatar

Great update, as per usual. Thanks, Matt!

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Connor Cochran's avatar

Thanks, Matt. On Altice, I’m curious what the lead up to their precarious position was over the last 5-10 years. How did they get here? You mentioned under investment in the network. Were they susceptible to overbuilders because of network, ARPU, customer service, etc.?

Thanks!

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Perpetual Investing's avatar

Hey Connor, thanks for the comment! I think leverage is probably the biggest reason they're here. They bought two large footprints (Suddenlink & Cablevision) back in 2015 for ~$27bn. Business had >$20bn in debt when it went public in 2017.

They road the wave of increased broadband penetration, pushed price and cut customer services to generate big margins ("The Altice Way"). when the outlook for cable broadband changed they found themselves losing subs, operating an underinvested footprint, and no way to make the capital investments required.

They've lowered prices, are building fiber in areas with heavy Verizon Fios overlap (mainly east coast footprint), and upgrading all SL footprint to D3.1. But they're generating essentially 0 fcf with ~$24bn of debt - they have a few years before material maturities, but a lot needs to go right over the next few years.

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