When French telecommunications company Altice took over US cable companies Cablevision and Suddenlink, chairman Patrick Drahi made a bold statement: Altice USA would rival Comcast and Charter in size and become one of the three dominant US cable operators.
Fast forward almost six years, and Altice USA has approximately 5 million customer relationships, compared to approximately 31 million each for Comcast and Charter. (Altice USA on Monday announced a $ 310 million acquisition of Morris Broadband that will bring an additional 36,000 customers.)
CEO Dexter Goei explained to CNBC what prevented Altice USA from expanding rapidly, why he believes that cable and radio will eventually merge in the US, and why it is only a matter of time before cable television becomes extinct.
“Of course I’ll tell you what I think about my own book. But what is true, and continues to be true, and will be true for a very long time, is the broadband connection. Penetration continues to grow and cable companies continue to be at the forefront of dominant market shares and people will continue to want to improve their speed and get better and better technology. “
“I think you can also say that wirelessly. But there is one big difference: with wireless devices, you also swap out your handset every two or three years. That’s an expensive thousand dollars buy when you buy high-end products. Second, the difference between 4G and 5G or 3G and 4G is not so catastrophic that it requires significant price improvements in terms of consumer willingness to pay. And I think that in the wireless world in general, competition is likely to become more competitive than less competitive. ”
The growth of free cash flow and the predictability of free cash flow is very special. And it is very much the cable and landline history today.