An Altice executive hinted that the company might be able to make a more profitable run at the wireless business than Charter and Comcast have been able to do.
“We want to make this a profitable standalone business,” Altice’s Dexter Goei said last week during the company’s quarterly conference call with analysts, according to a Seeking Alpha transcript of his remarks. “So, we don't anticipate, even in our first year of operation, to lose money on this. There may be working capital timing differences relative to handsets and how we treat those, but in terms of losing money, we are not going to lose money.”
Goei added that he doesn’t believe Altice will lose money in the effort on an EBITDA basis or on an EBITDA-less capex basis either.
Those comments are noteworthy considering Comcast has lost roughly $1.2 billion so far on its own Xfinity Mobile efforts, according to a tally by BTIG analyst Walter Piecyk.
For its part, Charter said it spent $116 million during the second quarter on its Spectrum Mobile MVNO, which launched at the end of June, including $33 million in operating expenses and $53 million in capital expenses.
Altice inked an MVNO deal with Sprint late last year and has said it will launch a mobile service via the deal sometime next year. Already, the company has hired Jean-Charles Nicolas, previously the deputy CEO and CFO of Altice’s Dominican Republic operation, as the chief executive of its U.S. mobile operation.
Altice will join Comcast and Charter in the U.S. MVNO space; Charter and Comcast today offer virtually identical wireless service plans, though the offerings are only available to their existing internet and video customers.
But Altice’s Goei said that his company will tackle the wireless market in a slightly different way.
“On Altice mobile, we're on track to launch next year and will have 4G LTE and voice-over-LTE services available straight away,” he said last week. “Recall we have a full infrastructure-based MVNO, which has attractive economics and flexibility features for us. We have a dedicated and experienced mobile management team which will lead the development, launch and ongoing mobile strategy. In terms of network development the densification of Sprint's network, which we're helping with our AirStrand deployment is comfortably ahead of schedule as are the upgrades to and expansion of our Wi-Fi network. We are also testing CBRS spectrum with equipment in a 3.5 gigahertz band as this may be good complementary capacity for us.”
Indeed, Sprint’s CTO confirmed last week that Sprint has deployed “tens of thousands of strand mounted small cells” with Altice through the MVNO deal that the companies inked late last year. Those small cells will likely give Altice the ability to reduce the costs of its own MVNO service by running its mobile customers’ connections through those small cells. That, in fact, is a strategy that both Charter and Comcast also appear to be heading toward since both companies are also testing their own small cells.