Good day, and thank you for standing by. Welcome to the Altice USA Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to hand the conference over to your first speaker today, Mr. Nick Brown. Sir, please go ahead.

Hello, everyone. Thank you for joining. In a moment, I'll hand over to Altice USA's CEO, Dexter Goei; and CFO, Mike Grau, who will take you through the presentation, and then we'll have time at the end for Q&A. As today's presentation may contain forward-looking statements, please read the disclaimer on Page 2. Dexter, please go ahead.

Hello, everyone. I'm going to start today by summarizing the full year and Q4 results. And then I'll provide a recap on our strategy to accelerate investment plans. Starting on Slide 3. Revenue growth for the full year in 2021 was 2% year-over-year with a strong recovery in News and Advertising and Business Services. Organic broadband customer net losses were 3,000 for the full year. This is a bit better than I previewed in December as we finished the quarter better than expected. We just launched more competitive Internet + Mobile converged offerings in January as planned and have begun expanding our sales distribution channels to support additional growth. Full year adjusted EBITDA grew 0.3% year-over-year with a margin of 43.9%. We delivered another strong year of free cash flow at $1.6 billion, in line with our target. This supported share repurchases of $805 million for the year, although in Q4 we shifted capital deployment to heavier investment in the business to drive future growth. Lastly, I want to highlight that we announced today a new plan to bring 100% fiber broadband, delivering multi-gig speeds, to more than 2/3 of our entire footprint over the next 4 years, reaching a total of 6.5 million FTTH passings by the end of 2025. This will include about 4 million fiber passings at Optimum, covering all the areas where we overlap with Fios and Frontier, and 2.5 million fiber passings at Suddenlink. Fiber is the future and given the progress we have made at Optimum with our fiber build, we're excited to build on that success and break ground later this year at Suddenlink to bring our state-of-the-art network to more customers and communities. We strongly believe this is the right approach to improve customer experience and enhance the value of the business.…

Thank you, Dexter. Good afternoon, everybody. Turning to Slide 15. You can see our adjusted EBITDA margin was 43.9% in 2021 or 44.8% ex mobile, which is slightly ahead of 2019 levels. Remember that we had some temporary savings in 2020 at the peak of the pandemic, making 2019 a better comparison. Full year adjusted EBITDA grew 0.3% year-over-year, although Q4 EBITDA declined 5.9% year-over-year with the revenue decline and higher marketing spend. Our EBITDA less CapEx or operating free cash flow margin of 31.7% in 2021 was also ahead of 2019 levels, although a bit below last year driven by increased network investments. I do want to remind you that some of the areas where we are increasing investment will include higher operating costs as well as higher CapEx, which will likely negatively impact margins in 2022 to drive better customer growth and higher medium to long-term revenue and cash flow growth. Specifically, we're looking at over $100 million of additional OpEx, including rebrand costs, which are more of a one-off, expanded door-to-door sales and retail store distribution and higher marketing spend around our revamped mobile and converged offerings. On Slide 16, you can see our capital intensity was 12.2% in 2021, up from 10.9% in the prior year. Without fiber and new home build growth investment, this would have been closer to 9% in 2021. Our CapEx target in 2022 remains between $1.7 billion and $1.8 billion on a cash basis, including $300 million to $400 million of additional FTTH CapEx and $100 million to $200 million of additional new build CapEx. Note, this excludes any CapEx associated with potential subsidized rural broadband construction as this is more uncertain right now. However, as Dexter said, we are pursuing this opportunity aggressively as we are experienced in fiber construction…

[Operator Instructions] Your first question comes from the line of Philip Cusick with JPMorgan.

A couple. First, the faster fiber build in '23 and beyond, do you think that leads to higher CapEx in those years as well or is the $1.7 billion to $1.8 billion a good range?

Phil, the math isn't perfect here given that there's going to be some HFC-related maintenance and growth CapEx that's going to be coming down. But I think it's probably fair to say that we probably will be a couple hundred million dollars at the most higher in CapEx for a couple of years like in 2023 and 2024, and then it starts coming down in 2025. And obviously, 2026, it's a massive reduction in CapEx.

That helps. And then you said you ended December better than expected. Can you talk about what you're seeing in the market? Just expound on that a little bit, whether it's moves or new interest. What do you see out there?

Well, I think it depends in our markets. But broadly speaking, even coming into January and February, gross activity is lower but it's relatively stable relative to last year, so not at all back to 2018 or 2019 levels. And depending where we are in our footprint, from a competitive standpoint, churn rates are in line to slightly higher depending on if we're seeing increased competitive intensity or not. But what we're seeing is that where we are providing 1-gig service, where we are providing now good distribution on the mobile side and where we're starting to start delivering better distribution channel productivity, we're seeing better performance there on the sales side of our equation. So the reason why Mike and the team have agreed to not drive too much financial forecasting at this point is because we are starting to see some nice returns on investment. And we'd like to just maintain some flexibility here if we need to for the next couple of quarters, but I think it depends. Fios is not being hypercompetitive as much as it was in the better part of 2021. They've raised their prices on data. Where you have seen some aggressive marketing and pricing is on the AT&T side, but AT&T Fiber only overlaps with about 400,000 of our homes passed on about 12% in our Suddenlink footprint today. That will increase obviously as AT&T increases its fiber footprint. So we're not seeing any massive competitive pressures here, but it is a month-to-month kind of change of pace depending on if something new comes up.

Your next question comes from the line of Jonathan Chaplin with New Street Research.

Two for you, Dexter, if I may. So first, on ARPU, it looks like it was down a little bit year-over-year. Wondering if you can talk through just the dynamics of where your new offer pricing is relative to ARPU. And as you sort of rectify the business over the course of the next few quarters, where you think ARPU washes out? And then my second question is, it's been a long time since you've given us a thought of where CapEx and margins would be once you get through the fiber upgrade. I recognize a lot has changed since you last gave that guidance. Where now do you think in 2026 once the upgrade is done sort of business as usual CapEx and margins would land?

So on the ARPU side, even though our overall residential ARPU from a fourth quarter standpoint year-over-year or from an annual standpoint is slightly down, obviously, that's driven primarily by the impact of what's happening on our video side of our business. And also what we're doing in terms from a promotional standpoint in the third and fourth quarter where the gift with purchases, which is whether it's either gift cards or OTT, is contra revenue. And so that impacts obviously our ARPU numbers, but it's nonrecurring in many respects. So we still feel good about our broadband ARPU. I think what I had mentioned on third quarter earnings is that even if we stayed as promotional as we were in the third and fourth quarter of last year throughout this year we'd be flattish on broadband ARPU. And so we feel good about those levels. And then I can't call where video ARPU is going to go, but we continue to see some decent attrition and low levels of attachment on gross adds there. With regards to CapEx, if you look at our non-fiber CapEx today, we're probably close to about $1.1 billion, $1.150 billion type number. But if you were to extrapolate to a pretty much a full fiber network by 2025 of 6.5 million homes, our non-fiber CapEx related to HFC is going to come down materially from there. So I think it's fair to say that we're looking at a sub-$1 billion type of CapEx number from 2026 onwards and probably already in 2025 we'll start seeing numbers in the mid to lower teens of the $1 billion. And from a margin standpoint, that's a little bit difficult one for us to call, Jonathan, given that video plays havoc with margins here. But clearly, the gross margins on data are very strong. And given that we continue to migrate more and more to a heavier weighting on data, you'd expect to be able to get to significantly high margins to where we are today.

Dexter, if I could just follow up on the ARPU comment. When we look at where the new offer pricing is, I forget the numbers, I think it's $40, $50, $60 or $45, $55, $65 on broadband, which is all below where average ARPU is for broadband. With bringing customers on at these rates on what looks like flat pricing plans, how do you maintain ARPU in that sort of $74, $75 range?

Well, I think our gross add ARPUs today on data, given that we are seeing 50%-plus of our gross add subscribers taking 1-gig, we're seeing those numbers in the kind of mid-$60s in terms of the gross add ARPUs on data. And so we're not too far off from where our average is. And then obviously, rate action and the fact that 50% of our subscriber base continues to be at 200 megabits or less continues to drive some nice upsell. And you have to remember, we're in a heavier promotional time period right now. I don't expect our pricing relative to Fios, which is about $20 to $25 cheaper today on 1-gig, for us to maintain those levels. So we'd expect to continue to be able to drive ARPU growth here on data for the near term. And as we go into multi-gig, which we'll start announcing in the middle of this year, we will have that product road map to go up to higher speeds and higher ARPUs.

The next question comes from the line of Craig Moffett with MoffettNathanson.

Two questions, if I could, Dexter. First, the wireless strategy, your peer cable operators have obviously made it a very large part of the business, and you've had a lot of fits and starts. I wonder if you could just put a little more meat on the bones of why we should be confident that now is the time we can start to see some acceleration in the wireless strategy and what you can accomplish with wireless. And then second, there is, I think, a concern that so much of your share count is held privately that there may not be a near-term incentive for you to get your stock price up. I wonder if you could speak to that and maybe provide some reassurance about your own ambition in the stock price and Patrick's as well perhaps.

Well, I'll take the first question first, then I'll take the loaded question second after. On the first one, wireless, I think we've been clear that wireless is very important to our strategy, Craig. Yes, you're exactly right. I think you used the right terminology, fits and starts. It's been a year now that we've been re-homed on the T-Mo network. And we've seen our churn rates come down from mid-60s to 70% down to mid-30s today, continue to improve month-over-month. And so we are at that stage where, one, we weren't going to talk about publicly, but we are on the 1-yard line, even though football season is over, to talk about announcing a new agreement with T-Mo. And so we're very pleased. I think our partners are very pleased with our commitment as well and our financial commitment. And we'll be able to talk about that a little bit more once we announce it. But it will allow us more flexibility and will provide our partners as well as T-Mo with some good financial incentives as well. And we think that we can mimic and do better than our peers over at Comcast and Charter who are starting to grow their mobile subscriber bases nicely. So we don't see there's any reason why we can't achieve as good of results, if not better, than our peers there. And you'll start seeing some of those strategies unfold over the next couple of months as we start being more promotional and obviously as we lead into a rebranding of Suddenlink in April throughout the rest of the year and a real reinvestment in the Optimum brand throughout the year. So those strategies you'll start seeing unfolding in the second quarter all the way through the end of the year, and…

Your next question comes from the line of Brett Feldman with Goldman Sachs.

Thanks for the update on your plans for the fiber deployment. You obviously have very specific targets for where you expect to get from a fiber passings standpoint. I was wondering if you'd be willing to share any ambitions or targets that you have for fiber penetration. And what is the penetration strategy? Is it primarily about making sure that you can get as many of the gross adds as possible connected or do you have an intent to go out there and try to proactively move existing customers over? And then just as a component of that, you've articulated CapEx is likely to remain elevated by a certain degree as a result of the passings. Are you also budgeting a certain degree of, I guess, fiber connect CapEx in there if there's a lot of demand for the product or would you think of that as all success-based?

Yes. I mean, Brett, the goal here is better experience for our customers leading to significantly reduced churn and reduced OpEx cost on customer touch points, right? And then ultimately, obviously, a significant reduction in our CapEx going forward. And so today, where we had been focused on gross add fiber clients and not so much focused in terms of migration. Because of the stability of some of our CPEs and our installation processes, those have materially improved over the last 3 months, which is why we're about to launch in March. And we're going to start aggressively migrating 1P customers from HFC on to fiber, and then we will move into the 3P world over the course of the year. And that will be capitalized CapEx from a new install standpoint. But from our perspective, if we are seeing already on 70,000 customers and even smaller cohorts of that an annualized improvement in churn of 5 to 6 percentage points after 3 months, that is boding well for all of the things that we have put into our financial model, 45% better NPS scores, 30% less calls into the technical call center, ARPU rates of 6% to 8% higher in terms of gross add ARPUs, right? So if you throw all that math into the cookie box, it looks pretty good as we start to continue to grab volume even though from a customer connection standpoint, it may be expensive to move people who are producing very good cash flows just on HFC. But the goal here is to move as many people over to fiber as possible over the next couple of years and go after all customers, existing and new customers, and try and put them on fiber.

Our next question comes from the line of Ben Swinburne with Morgan Stanley.

Just following up on fiber and I had a wireless question as well, but first on the fiber side. Dexter, you guys have been at this for some time on the fiber front, but you're obviously scaling up significantly. Can you talk a little bit about sort of the operational areas that you're focused on or any uncertainty around scaling the build level this quick, this substantially. I'm thinking about just like red tape and labor supply and supply chain. A lot of companies in the U.S. are ramping fiber builds and these are not insignificant work projects, as I'm sure you know way better than I do. So I guess if you could talk a little bit about that and sort of how much confidence you have in your ability to hit these passing numbers. And then just on the OpEx savings, can you talk a little bit about the time line to pick those up? In other words, are you sort of running 2 networks for a period of time, DOCSIS and fiber? And so do you sort of cut it over node by node and that leads to the drop in maintenance costs, et cetera? Just help us think about that too as well.

Sure. On the first point, you're spot on, Ben. We've gone through fits and starts here. And obviously, COVID was probably the worst thing that could have happened to us in terms of trying to accelerate on the CapEx side. But the big red tape stuff for us has been the state of New York. We have about 700,000, 750,000 homes that we're waiting on effectively the governor's office to approve. We feel very comfortable that half of those we will get very shortly. And the other half we'll get also this year. So that has been one of the biggest red tape initiatives to overcome over the last, really, 1.5 years was some of the oversight from the state of New York, which has changed the dynamic in terms of permits. But we feel good about getting those requirements. Connecticut does not have those types of permit approvals from the governor's office. And so we've got 300,000 to 400,000 in the Connecticut area coming out this year, which is the balance of our Optimum footprint this year. And so we feel good about the pipeline going into 2024, which we're going to get closer to completing the entire Optimum footprint in 2024. On the labor side and the raw material side, on the raw material side, we have currently 9 to 12 months of enough inventory. So we've got enough inventory for this year. As you do know, the larger group of Patrick and its sister companies are big acquirers of raw materials and inventory. And so we feel good about our ability to fulfill our 2023 and onwards capacity there. So we're not worried about that. That's obviously a focus. It's been a focus of ours for many, many quarters to make sure that we're maintaining at least…

And anything on the savings? Do you run 2 networks, et cetera?

Yes. I think the savings is, there are obviously savings from shutting down one network, which relate to power and to maintenance. But the biggest savings are related to customer touch points. We've seen our sister companies deliver 40% to 50% less customer touch points on fiber versus cable. And if you look at the OpEx that's related to customer servicing, it's about $1 billion. And so if we can start reducing that over time by 40% to 50% because it's just mathematical in terms of the amount of calls and truck rolls that you do, that's a massive number. I mean, obviously, the things that you can quantify are NPS, customer satisfaction and churn rates that go along with that, right? So we know that we've seen cable versus fiber in a European context be 7 to 8 percentage points better on churn. And so our early read of an annualized number of 5% to 6% is not off the mark. And we're already seeing 30% less calls versus the 40% to 50% numbers that we've seen from other companies who've run dual network. And so we're on track. We're on track to delivering what we think is going to be pretty standard in the industry in terms of the customer experience, and that's going to translate in some very, very large OpEx savings, CapEx after we finish the rollout. And then on the revenue side, I think it will be very interesting to see how much translate into increased revenue by better NPS scores and reduced churn, right?

If I can sneak one in on wireless just going back to Craig's question. As we watch you relaunch this product and accelerate the customer growth in '22 and beyond, any help thinking about wireless service ARPUs that you guys expect? Because I know you're selling a lot of by-the-gig plans and you've got some promotions out there. It's hard for us to see that in the historical financials. So I don't know if you had any thoughts that would help us think about that business as it scales here on the ARPU side.

Yes. I mean, we're kind of in the low to mid-$20s in terms of ARPU. And that has been tailing lower during 2021 because by-the-gig plans were more popular than the unlimited plan. But with our new agreements, which pricing will be active as of Jan 1 this year, we're going to be driving much more on the unlimited packages. And so we suspect that the ARPU levels will be firmly ensconced in that mid-$20s and hopefully higher as we continue to grow.

Our next question comes from the line of John Hodulik with UBS.

Great. Just a quick clarification to start off with, Dexter. On the 6.5 million, and I know you guys talked about it a little bit, does that include any subsidies you expect to get from the government? And if things go well, I mean, could that number creep higher? And if you could sort of size that first, that would be great. And then sort of related to that, can you quantify the extent to which you guys think you can do edge outs and increase the footprint. That's sort of all one question. And then just really an unrelated question, and I think you've answered this basically as part of every other question. But I mean, did you look at DOCSIS 4.0 deployment, especially in the new Suddenlink territories where you're sort of within a greenfield? And I guess, obviously, you decided against it. But I guess is your view that eventually the rest of the cable industry will head in the same direction as you guys and just go for fiber?

So on the first one, John, listen, we've identified 2.5 million homes in the Suddenlink footprint which we'd like to fiberize. And that's really based on scale mainly and some competitive nature in some areas which we think we argue can drive penetration even higher by putting in fiber. Whether that 2.5 million is all going to be funded by us or some portion of it will be funded with some subsidy money, I couldn't tell you. We're in the early innings of the subsidies game. We've done 150,000 applications for homes passed. We think we've won 30,000 here. And so if we use that same ratio, let's call it, and we're applying for about 1 million, maybe we can end up getting 200,000 homes there, which will be part of that 6.5 million, but it may take you to 6.7 million because there's 200,000 homes who are never going to upgrade given that they're in much more unserved, underserved or non-served areas out there. But what we do know is that we are definitely going to hit 2.5 million homes in Suddenlink and around the edges of 100,000 here or there, plus or minus. I couldn't tell you where we end up landing, but I suspect it will be higher than 6.5 million by maybe a couple of hundred thousand homes. On the edge outs, we continue to see abilities for us to edge out. We're going to do 175,000-plus of edge outs this year. I hope that we'll be hitting a run rate of closer to 200,000 a year by 2023. And we'll be fiberizing as much of that as we can. Some of it is going to be plant extensions on HFC. It's going to be difficult to do fiber in isolation. But we also have intermediate…

Your next question comes from the line of James Ratcliffe with Evercore ISI.

Two, if I could. Michael, just give us an idea or ballpark how much that one-off component of the extra $100 million in OpEx is for '22 and how much is really run rate? And just secondly, Dexter, sort of conceptually, last year, the company was buying back stock in the mid-$30s. Where the stock is now, the accretive impact on free cash flow per share is more than twice what it was a year ago. So is it your view on the returns on fiber have gotten dramatically better in the last year or is there something else that's saying, even at half the price, fiber is the better play than the stock now?

So James, in answer to your first question, I would say the one-off element, which is the rebranding of our incremental OpEx, a placeholder in the neighborhood of $30 million would probably work fine.

Listen, I think on the return side, there is a financial engineering element which any Excel spreadsheet would suggest that buying back our stock today at $15 relative to mid-$30s is not a bad bet. But in order to continue to aspire to mid-$30s and higher values, you've got to understand that the underlying operations need to be dynamic and you need to be able to react appropriately on the capital allocation decision. And the capital allocation decision for us is very clear, even if maybe the year-over-year returns are maybe not as good as buying back our shares, the longer-term returns or even the medium-term returns are exponentially higher by investing in our network today as quickly as possible, one, for organic growth and the customer experience issues of our existing customers, but also from a competitive dynamic standpoint where markets are getting more competitive. Not all markets, but some markets are. And getting ahead of that curve and being proactive here is going to drive our views of the asset value and terminal value exponentially higher than just buying back our shares, right? So if we get back down to a sub-$1 billion CapEx number in 2026, we're really looking at if we get back to EBITDA numbers that are similar to last year or the years before, we're looking at $1.7 billion to $2 billion of free cash flow. And on 450 million shares, it's not a bad kind of $4 per share of free cash flow and growing if we've invested correctly in our network and growing nicely. That seems like a pretty nice return for us and for all shareholders going forward. So we feel good about the investment profile today. And as I just mentioned to John in the last question he asked, the fiber performance is showing everything that we thought it was going to show. And as we continue to drive bigger volume numbers, we're confident in being able to drive some very good operational KPIs here.

Your next question comes from the line of Michael Rollins with Citigroup.

Just a follow-up and then a question on the competitive landscape. So for the follow-up, with the guidance for higher cost of $100 million during 2022, should that be taken on the fourth quarter run rate or on the full year 2021 cost base? And then just curious if you're seeing any early impacts from fixed wireless access products. And when you look at the combination of expanding fiber competition over time and the possibilities of fixed wireless, when you're underwriting the business case to upgrade to fiber, are you incorporating any significant market share increases for the broadband business?

Michael, in answer to your first question, the incremental OpEx that we're approximating would be versus a full year '21.

And I think on market dynamics, what we had first envisioned was no revenue enhancement on FTTH versus HFC and really just a free cash flow return because the OpEx numbers and ultimately the CapEx number is going to come down significantly. But we're starting to see the early signs, both through gross add ARPUs and reduced churn numbers, that we'll see a nice revenue impact. Taking market share is probably the wrong way to think about it, but reduced churn by definition, we should be able to take market share. And so if we're seeing annualized reduced churn numbers already at 5% to 6%, we should be able to take that incremental market share over time in the areas where we have fiber. And if not better because we're seeing more like 7% to 8% in other markets around the world in terms of the head-to-head competition. So that is where we think that we'll be able to drive incremental market penetration and not by being aggressive from a promotional ARPU gross add standpoint.

And are you seeing any early impacts from fixed wireless and have your views of that product and the competitiveness of that product evolved as you've seen some of the new offers hit the market?

In our areas, no. Where we are seeing potential threats on fixed wireless is in MDU contracts where some of the fixed wireless providers are aggressively going after MDU contracts across, I think, fixed land country where they can deploy their capital aggressively and be aggressively promotional on ARPUs. I think we feel very good about our ability to defend our MDUs, particularly since we're upgrading most of them up to fiber quickly, and we've got strategies on loyalty from that standpoint. But that's where we see, let's call it, competitive pressure, but not from a gross add activity standpoint today.

Your next question comes from the line of Kutgun Maral with RBC Capital Markets.

Two related ones on asset monetization, if I could. First, you have a multiyear plan to accelerate investments across your core cable business. Does that change your appetite to monetize any assets that might be considered noncore? And just on the flip side of that, I realize you're embarking on a more meaningful path to driving long-term value with cable assets. So maybe perhaps this is becoming a less relevant question. But is there an updated view on monetizing some or all of your cable assets?

So I don't think we have anything that we believe is noncore to start off with. You could say maybe the advertising business is maybe noncore, but since a lot of the advertising business is tied to our video inventory, it's very difficult to separate those businesses, but that could be something that we definitely could always look at if we could look at bulking up in size or somebody would like to bulk up in size on the advertising business is probably by working with our fellow MVPDs in one way or the other. We do have 50.1% of our Lightpath business which is less core, let's call it, to our business given that it's a different, it's just a different network in many respects than our residential or SMB business. But again, it's in very strategic location relative to our B2C business. So I wouldn't say it's noncore. We were able to arbitrage obviously valuations nicely by selling 50% of that business. And so I wouldn't ever rule that out on there. And then in terms of the cable network, I'm assuming what you're suggesting is maybe selling the HFC network itself as opposed to the HFC network and its customers. I don't think we're in the business of selling the customers. I think it could be interesting just given that we would have 2 networks in many areas whether we would ever see any value or someone would see some value in buying the HFC network. I'm not so sure we would do that either given that we're just bringing another competitor. But I don't see us ever wanting to arbitrage selling some of our cable subscribers to fund an FTTH rollout. There's always going to be things at the edge that make no sense because they're in small jurisdictions and communities that maybe are very inefficient for us to run from very far away, but that's optimization and not about selling businesses out there. So I think we like the business. And as we grow into a predominantly fiber-to-the-home company, one of the larger ones in the U.S. after AT&T and Verizon, I think we're very well positioned for the next generation of consumer trends and experiences.

Your next question comes from the line of Greg Williams with Cowen.

First one is just on the fiber-to-the-home strategy. Obviously, you're getting more aggressive in the Suddenlink territories. Just wondering if you could provide some color on the cost per home passed in the Suddenlink build. In the past, you said in Optimum territory you can do it rather cheap, $500 to $600 because you have 80-plus percent aerial fiber, dense footprint, et cetera. But how does that translate into the Suddenlink territories in terms of cost per home passed as I think about the outer-year CapEx? Second question is just on margins in 2022. Just help us with the trajectory of the margins through the year as you think of the many moving pieces and the $100 million OpEx increase in terms of the sales reps, retail stores, mobile investment and then the advertising sort of tailwinds in the second half.

So on, I think, Suddenlink footprint, it's difficult for me to give you just an overall number because every community is a little bit different. But we do see the areas, obviously, that we're focused on are the higher density areas and where we do have the bulk of our customers. So there will be areas which are going to be slightly more expensive than Optimum, and there'll be probably areas which are going to be twice as expensive as Optimum, right? So probably anywhere between $500 to $1,000 per home passed on average, let's call it, in terms of what we're going to spend in the Suddenlink footprint. And then on margins standpoint, I think back at the UBS conference in the beginning of December, we talked about 41% to 42% EBITDA margins for 2022. I think those numbers are in the ballpark. Again, we have enough moving pieces in 2022 that we want to reserve the right to be more nimble in terms of how we allocate capital. But directionally, that's probably the right level.

And our last question comes from the line of Frank Louthan with Raymond James.

It's Rob on for Frank. You might have said this earlier, how much CapEx and OpEx do you expect to spend on distribution channels this year? And then separately, on your recent efforts to seek broadband subsidy, how much do you guys think you can get from the government from those subsidies over time?

Yes. I'll take that. On the distribution channels, on the retail stores, it costs about $900,000, so just under $1 million per store to get a store up and running. That would be the CapEx component. And then once the store is up and running, call it, $500,000 to $600,000 annually. And then on the door-to-door salespeople, we're talking about doubling our footprint from 250 to 500, maybe we get to 400 and I think a fully loaded door-to-door salesperson, maybe something in the neighborhood unit cost of $75,000 to $100,000 would be about right.

And I think on the subsidy side, listen, every community is a bit different, but most of these unserved or underserved markets who are looking to upgrade to at a minimum 100 megs of symmetric fiber up and down in terms of speed are spending anywhere between $2,000 to $4,000 per homes passed on average and are typically contributing somewhere between $1,000 to $2,000 into the subsidy kitty. And so we're doing the balance of it. So we're spending anywhere from $1,500 to $3,000 and local communities are spending anywhere from $1,000 to $2,000 type numbers. And so depending on how many homes we end up being able to get, if we would look at the high end of it where we could get probably a couple of hundred thousand, we end up probably getting somewhere between $200 million to $300 million of subsidies.

Thank you. This does conclude our question-and-answer session. Turning the call back to our speakers, sir, please go ahead.

Thank you, everyone, for joining. Do reach out if you've got any follow-up questions. Otherwise, we'll catch up with you in the next few weeks. Thank you.

Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.