Greetings, and welcome to the Altice USA Third Quarter 2023 Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sarah Freedman, Investor Relations. Thank you. You may begin.

Hello, and welcome to our Q3 2023 earnings call. We are joined today by Altice USA's Chairman and CEO, Dennis Mathew; and CFO, Marc Sirota, who together will take you through the presentation and then be available for Q&A. Today's presentation may contain forward-looking statements, please carefully read the section entitled Forward-Looking Statements on Slide 2. Dennis, please go ahead.

Thank you, Sarah. Kicking off on Slide 3, the close of the third quarter marks 1 year since I joined Altice USA as CEO. It has been a year of transformation for the company as we established and began to deliver against our core pillars of having the best customer experiences, best customer relationships, best network and the best people. I'm incredibly proud of what we've accomplished over the last 12 months, and specifically during the third quarter. In Q3, we saw quarter-over-quarter and year-over-year advancements across a variety of operational metrics, which correlates with the continued improved health of our business. For example, we saw improvements in broadband subscriber relationship trends, mobile net additions, fiber customer growth, financial performance, customer satisfaction scores and operational metrics such as reduced call volume and truck rolls to name a few. Specifically, Q3 marks the second quarter in a row of improved broadband net adds on a year-over-year basis. The progress demonstrates that we are competing better in our markets, and we are particularly pleased that we are seeing our win share improve against many competitors across our footprint as we drive high-quality services, value and experiences with our network and products. On mobile line net additions, we grew Q3 mobile net adds at 5x the pace as we did in the third quarter of last year and had our third straight quarter of mobile line growth acceleration. We continue to sell mobile across our base, emphasize our converged Optimum Complete bundle and enhance the Optimum Mobile experience with better device offers and optimization of our sales channels to more effectively sell mobile. Turning to fiber, we continue to see growth in fiber customer net additions, reporting our best quarter in fiber customer growth in Q3, and we will continue to see penetration…

Thank you, Dennis. Turning to Slide 7. I'd like to begin with our broadband subscriber trends. Last quarter, we began to close the gap on our subscriber net losses year-over-year. I'm pleased to share, in Q3, we continue to see fewer net losses reporting broadband customer net losses of 31,000 compared to losses of 43,000 in Q3 of last year. This 13,000 improvement is driven by better trends across our footprint. Breaking down the Q3 broadband trends, we continue to be impacted by a slow housing market and a low move environment. And we have ongoing pressure from competitive fiber operators and fixed wireless. Despite these headwinds, we are receiving improved underlying trends in competing through better fiber network upgrades and more strategic go-to-market activities. For example, although we see muted gross add activity due to the low move environment, as Dennis mentioned earlier, of the pool of potential gross adds, we saw improved rates of win share at Optimum gaining 4 percentage points of win share quarter-over-quarter according to Opensignal data. This is mainly due to our stronger competitive approach against fixed wireless, DSL and legacy fiber operators in our footprint. Consumers who have the choice of fixed wireless in our footprint are now choosing Optimum more often as we can offer speeds up to 32 times faster than fixed wireless competitors. We attribute this shift to a few things: stronger sales performance across all channels and having strengthened our competitive marketing and advertising to highlight our network, speed, experience and product superiority, ensuring customers know that the quality and value of Optimum is top tier. It's just one of the factors driving our improved broadband subscriber performance, but is also meaningful because it demonstrates that we are competing on the quality of our service and not just price.…

[Operator Instructions] Our first question comes from Phil Cusick with JPMorgan.

Dennis, let's dig into the new rate card that you discussed. How should we think about that impacting subscriber trends? And sort of promoting around that should we think about lower gross adds with a little less promotion upfront? Some companies do things like never-changing ARPU, things like that and impacting churn later? Or do you anticipate sort of a less of an impact? And then second, you talked about stabilizing broadband subscribers. Do you think that's feasible in 2024 or maybe beyond that?

Thanks, Phil. The new rate card is all about simplicity, transparency, predictability. And so as we move forward, we really want to be able to reduce the complexity for our customers. This will reduce the delta between gross add offers that are in the marketplace versus rate card. But we believe we have the right offers in market today. And so we have a great value. We've got the right offers and with Optimum Complete and the converged offer, we really do think we have a great value. We'll start to roll this out in Q -- in first half of next year with fiber. And then for our HFC customer base it's really all about getting them the right speeds at the right price. And so we will be moving forward with the speed gifting and making sure that all of our customers have the right speeds based on their rate cards and that's going to be a process that we'll undertake over the next few -- over '24 aggressively to really make sure that we've got everybody rightsized. And in terms of our broadband subscriber growth and sustainability, we're very optimistic. We're seeing all of the right trends and especially as we look at our KPIs, we're focused on delivering a great customer experience. And so as we look at NPS and the improvements we've seen there, reduced contact rate, reduced service visit rates, these are all leading metrics that we know are going to help us have a healthier business, healthier foundation. We're able to execute much more effectively with self-install and digital. That being said, there's still a whole host of macroeconomic challenges. When we look at moves being down almost at all-time levels, inflation and so we're very focused on controlling what we can control so that we can get back to long-term subscriber revenue and EBITDA growth.

Our next question comes from Kutgun Maral with Evercore ISI.

If I could just follow up on the broadband side. You talked about your win share improving against a number of your competitors. It sounds like that was mostly in the Optimum footprint and broad-based against different competitive technologies. Is there anything you could share on the Suddenlink side as well? And I know maybe you didn't want to talk about 2024 too much in terms of getting back to stable on the broadband side. But is there anything you could share on whether or not in Q4, you could continue the trend of improving the year-over-year results on broadband net adds against the 19,000 adjusted loss. And just briefly on the fiber passing side. Marc, I believe you've talked about new fiber passings to be at roughly 600,000 in 2023. Can you help us think about the build plan for 2024 and maybe 2025 as well?

Thanks, Kutgun. The good thing is that we've seen improvements across the entire footprint. When I look at trends, both in the East and the West, when we look at year-over-year trends, we are seeing improvements. And part of that is tied to implementing our new local market structure. We have 5 areas, and we have 5 new general managers that we've put in place. And these folks are living and breathing the business every day from competitive perspective, subscriber perspective, customer experience, operating metrics, employee engagement, community engagement, and that's making an impact. And they are empowered to drive the business. We are supporting them. We traveled the country. We visited each of these areas. They've been in place for quite frankly, less than 90 days. One is brand new, just starting in the role, but we are starting to see improvements across the board across the footprint. When I look at Q4, the competition is very aggressive in -- as we head into the holiday season. And so that's putting some pressure on Q4 trends, but it's too soon to commit to that Q4 performance. But our goal is absolutely to continue to drive improvement year-over-year. And so as I see the channel is performing whether it's door-to-door whether it's inbound, whether it's retail, we're continuing to see improved performance in terms of yield and productivity. But we are going to be disciplined. We're going to be disciplined around driving profitability and sustain growth. Marc?

Yes. As it relates to the 600,000 passings this year, you're right. As far as our plans for next year and beyond, we won't give specific guidance, but we're still very much bullish on the fiber plan and with the benefits that we see coming off of the fiber plan as we talked about previously. But as we said, each year, we'll evaluate the capital intensity of the business. Certainly, the level of fiber upgrade will be a part of that equation. And we'll take a very disciplined and balanced approach to make sure we're maintaining the right level of capital intensity.

Our next question comes from Jonathan Chaplin with New Street.

I'm sorry. I was on mute. Just following up on the last question on the fiber deployment, Dennis. I'm just wondering if it doesn't actually make sense to continue the sort of the postponement of the fiber process as you just work through some deleveraging next year and potentially kick it off again when subscribers and EBITDA are growing in a sort of a convincing sustainable fashion. And I'm wondering if you could give us some context for -- like the reason not to do that, obviously, would be if it would have a material impact on the recovery in subscriber growth. And so maybe you could give us some context around that -- around the trends in growth you see in fiber markets versus nonfiber markets? And how much postponing fiber deployment might impact the trends?

Thanks, Jonathan. We are evaluating the pace at which we want to continue that program. The good thing is we've got the right partners now in place, as we've gone through the process the last couple of months, we've identified some great partners, great quality, and we're ready to continue our fiber construction. We are evaluating the pace at which we'd like to do that going forward. It will likely not be at the same pace that we had initially planned for as we entered into the year, but still working through what that should be and what that -- what makes sense as we enter into 2024. That being said, fiber is just one of the tools that we have in our toolkit to drive recovery and long-term sustainable subscriber growth. We have a whole host of tools. We know that customers want quality and they want value. And so we are doubling down on quality, quality network, quality product, quality service. We're looking at every element of this business in terms of the CPE, in terms of training, in terms of making sure we fix the issues the first time and that is having a meaningful payoff and benefit in terms of reducing contact rate, increasing NPS, which we know is foundational to helping us drive long-term growth. And then on the value side, with Optimum Complete, we're seeing that really resonate in the market. We're seeing that resonate in our sales channels. And so we know that, that also is a great tool. Additionally, as we look at the entire footprint, you've heard me talk about 3.1 and continuing to invest there, and we want to continue that journey to make sure that we have 1 gig available throughout the footprint. We have it available 95% of the footprint, but we want it to be at 100%. And so we're going to continue to drive that. And so all of these are tools that will allow us to get back to that objective of long-term revenue subscriber and EBITDA growth. And so fiber is one of those tools, and we'll decide in the coming days at the right level, right pace where we need it. The good thing is we have 2.7 million homes. And so we are going to be focused also on driving further penetration against those 2.7 million.

Our next question comes from Jessica Reif Ehrlich with Bank of America Securities.

I have 2 questions. Dennis, you kicked off the call talking about, it's like just sort of highlighting that it's been a year and how much has been done. And obviously, the first year, there was a ton of heavy lifting and restructuring, a lot of management changes. As you look at the year ahead, can you talk about what remaining priorities and any other significant changes do you think you still need to make? And then secondly, I think that you said that half of your subs are still taking video. Can you just kind of give us your longer-term view on video? And maybe a comment on just Charter's deal with Disney indicate anything about how contracts will be dealt with going forward? How are you thinking about contracts with programs going forward?

Thanks, Jessica. It's been an incredible year. We've -- as I look at the accomplishments, the #1 objective -- my #1 objective was to transform the culture. And to transform the culture, we needed the right team in place, and we have 50-plus new Vice Presidents and above that are driving this business forward. Folks from all over the industry in every part of the organization, from sales to marketing, to field, to care, to finance, to program management, the list goes on, procurement, et cetera. And we still have some more work to do. And so as we close out the year and get ready for next year, we really need to make sure that we have all the right people on the bus, and they're all on the right seats. And so that is still my top priority because that is what is going to enable us to continue to drive this business and this transformation. And as I look at quality and value, we're going to continue to lean into quality. There's still more work to be done, and we're going to lean into driving our quality programs, whether it's on the network, whether it's on the product, whether it's on the service, making sure we have the right business partners and that they're delivering the right level of quality and holding folks to SLAs and really making sure across every part of this business, we are firing on all cylinders when it comes to quality and first time right. We're also going to lean into digital and continuing to drive that journey. As I think about programs like self-install, we've improved that by 71%, and we have more room to go, and we need to lean more into self-install, particularly as we think about video and…

And our next question comes from Brett Feldman with Goldman Sachs.

Two, if you don't mind. The first one is, if we just take a step back and think about the path to getting your broadband business back to growth, I'm talking about broadband revenues. And you look at the sum total of the things you've done and anticipated benefits of that, ultimately, what does that path look like? Meaning, do you anticipate that you could begin to see a tailwind reemerge in your broadband ARPU? Or is this really all about driving growth in subscribers and as the subscriber base grows, you're inevitably going to return to broadband revenue growth. So any help in terms of thinking about the mix there, if you get everything right would be helpful. And then the second is it's great to see that you're still converting about 60% of customers into paid lines when they come to the end of the promotional period. What have you learned about the 40% that aren't? How good are you getting at predicting that? And do you see an opportunity to either tweak the offer or tweak the upselling to kind of get to a higher pay rate on that?

Yes, let me jump in -- Brett, let me jump in on the mobile, and then I'll hand it off to Marc to talk a little bit about broadband ARPUs. But on the mobile side, we're excited that we were able to sell -- convert the 60%, and we were able to proactively reach out to customers make them aware, have great conversations. It's a testament really to great products, great service, they see the value in the converged bundle. We offered them an Optimum Complete offer, and that really brought that value together. Quite frankly, for the 40% that received it when I think about the approach last year, there was some opportunity in terms of really making sure the folks that were taking the product, understood what they were getting, why they were getting it. When we look at the usage rates, things like that, there was definitely opportunity in terms of how we were going to market last year with that free offer. And so we have those learnings. I mean, we team -- everyone I brought in comes in with those learnings so that we don't repeat the mistakes of the past. And going forward, it's about selling the value, selling mobile and really making sure that we're selling solutions that our customers want and need. And we've transformed the retail environment as well. We've transformed it from a service center to a sales experience. And that's going to allow us to make sure that we're properly solution selling going forward with mobile. Marc?

As it regards to broadband revenue, it will be a balance between subscribers and rate. And so you see we're starting to chunk into some of the subscriber losses, and we like the trend that we have there. But more importantly, on the rate side, you've seen that we've stabilized the broadband ARPU rates. And in fact, the past 2 quarters, we've actually grown the rates, and we're improving that year-over-year $0.22, which is fantastic. And so you'll see that we'll continue to strike the right balance between rate and volume to ultimately drive top line growth. In addition, we're very optimistic around what fiber actually brings to the table. We see when customers migrate on to the network from an HFC platform. We're seeing uplift in those customers. We're also seeing from just a gross adds perspective on pricing. Customers want the highest value, and they're willing to pay for 1 gig symmetrical speeds and beyond. And so they're paying us over $10 versus an HFC connect. And so we think that there is a path for both rate and volume to drive sustainable broadband revenue. And that's how we'll think about it and continue to kind of monitor it. On the other side, on the back book as well, we're being very disciplined. We've introduced a lot of AI functionality into the business, and we're just beginning to scale that. And so we're going to take a very disciplined customer-specific approach to managing the back book, and we're optimistic about what some of those early trials are yielding. And so I think we'll continue to be disciplined on the front book as well as the back book to ultimately drive broadband growth.

Our next question comes from Craig Moffett with MoffettNathanson.

Yes. I'm going to stay with the same topic of the new rate card guys. Just to make sure I understand. So what you were just describing, should we read that as you're going to try to opportunistically raise in rates at the low end of the customer base, while you're presumably cutting some prices for customers that are at the very higher end of your range and sort of try to bring everybody into the middle. And does that mean that your -- any customer losses that you see are more likely to be concentrated in lower ARPU types of customers? And then I have one separate question, and that's just as I think about the growth rate of the footprint where you had been growing in the 2% plus range. Is that -- should we expect that to continue to decelerate as it did a bit in the quarter as you sort of refocus your capital budget to potentially a slower path of rural edge outs and the like.

Craig, on the pricing and the base management strategy, again, as I mentioned, it's all about making sure that we have simplicity, reduce the complexity and provide transparency and predictability as we move forward. And we believe we have the right offers from a go-to-market perspective. What Marc was talking about was really as we move forward, just doing a much better job in channels like care, like retention to make sure that we're disciplined when we are having a conversation with a customer that we are providing them the right value, leveraging our CLV tools. So it's not about going back in and figuring out how do we cut at the low end -- increase at the low end, cut at the high end, get into the middle, it's all about leveraging customer lifetime value and being disciplined about the offers and the save rates and the erosion which, quite frankly, when I walked in the door was at an all-time high. And so we just have to become much more disciplined both on the front end in terms of our go-to-market offers as well as in our channels, retention and others. And we do want to reduce the delta between the go-to-market offers and the rate card and make sure that folks understand what's happening in year 1 and year 2, so that there isn't confusion. And that, I believe, will actually reduce call volumes. It will increase customer loyalty. It will remove some of the noise that's within our system today on confusion, on billing complexity, on just not understanding kind of what's the end game here. Let's give everybody clear transparency there. In terms of market growth, we're very bullish on new build. And we're going to rapidly get back to the pace that we were at, and we're already hitting the accelerator where we can in Q4, we have the right partners now in place, and we're very bullish on continuing to drive new build and edge out as we go forward. That is a key element of our strategy. It has been and will continue to be.

Do you think you can keep that north of 2% sustainably?

Yes, absolutely.

And ladies and gentlemen, that's all the time we have left today for questions. I'll hand the floor back to management for closing remarks. Thank you.

Thanks, everyone, for joining. Have a good evening.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.