Nick Brown - Head of Investor Relations Dexter Goei - CEO, Altice N.V. Chairman & CEO, Altice USA Charles Stewart - Co-President & Chief Financial Officer, Altice USA.

Bryan Kraft - Deutsche Bank Brett Feldman - Goldman Sachs Ben Swinburne - Morgan Stanley Craig Moffett - MoffettNathanson LLC Kannan Venkateshwar - Barclays Capital Jessica Reif Cohen - Bank of America Merrill Lynch Philip Cusick - JPMorgan.

Good afternoon. My name is Cheryl and I will be your conference operator today. At this time, I would like to welcome everyone to the Altice USA Q4 2017 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Mr. Nick Brown, Head of Investor Relations. You may begin your conference..

Hello, everyone. Thank you for joining and welcome to Altice USA’s full-year and Q4 2017 earnings call. In a moment, I’ll hand over to Dexter and Charlie, who would take you through the presentation, and then we’ll take questions. As today’s presentation may contain forward-looking statements, please read the disclaimer on Page 2.

The slides are available on the company’s website and a replay of this call will be available for the next month. And with that, it’s my pleasure to hand over to Altice USA’s, CEO, Dexter Goei..

expanding the availability of ultra-fast broadband speeds; launching our new integrated entertainment platform, Altice One; expanding our content line-up; commencing the rollout of a state-of-the-art fiber network; and signing a full MVNO agreement to be able to launch mobile services for our customers.

Moving on to Slide 4 is a reminder of the proposed transaction we announced last month to separate Altice USA from Altice NV resulting in two independent groups. There are further details in the appendix of this presentation, but I just want to summarize some of the key capital market considerations.

First, the transaction is technically a distribution kind or spin-off of Altice USA shares owned by Altice NV to the shareholders of Altice NV. The spin-off will simplify the way each group operates and enabled a separate U.S.

and European management teams to focus more on the distinct opportunities for value creation, as well as ensure greater transparency for investors. The financial structure of the group will be clear without any ambiguity about capital allocation between the U.S. and Europe, while maintaining balance sheet strength.

Prior to the separation, Altice USA will distribute a special dividend in cash of $1.5 billion. This dividend is conditional upon completion of the spin-off, which is still expected in Q2 2018. The free float of Altice USA A shares will significantly increase from about 10% to about 42%.

And lastly, we have now a lower leverage target of 4.5 to 5 times net debt to EBITDA. Back to the results, Side 5 breaks down the components of total revenue growth. Our residential business is just over 80% of total revenue, growing 2.9% in 2017 and 1.8% in the fourth quarter. Business services is growing in mid single digits.

Although if you look at the SMB, it is growing faster than this and I’ll come back to that. And our advertising business is performing really well, mainly driven by investments in targeted and national advertising capabilities in digital and linear and a strong market position in data analytics.

Advertising revenue grew 3.8% in 2017 with an acceleration growth in Q4 to 9.9% as we start to land some much larger contracts with a more diversified client base. Slide 6 shows how we have seen ARPU growth of 2% and slight growth of our residential customer base year-over-year in 2017, contributing to the overall residential revenue growth of 2.9%.

Specifically in Q4, Altice USA saw unique residential B2C customer relationship net additions of 6,000 and ARPU grew at 1.5% to $140. Slide 7 is a quick summary of our residential RGU trends.

I want to repeat that we’re committed to delivering attractive video products to our customers within profitable broadband bundles and this is where we are investing. On the left, you can see Altice USA’s overall video trends have not significantly changed.

With 25,000 pay TV net losses in Q4, which is better than the prior quarters in 2017 and broadly in line with the 21,000 losses seen in Q4 2016. We had the full commercial launch of Altice One in Optimum’s footprint last month, significantly improving our video product, which is going very well so far.

On the right, you can see we had 25,000 broadband net additions in Q4 2017, which is slightly below the 36,000 additions in Q4 2016, mainly due to the slowdown in Suddenlink’s broadband RGU growth observed since Q3 with similar quarterly additions of 8,000 in Q4 2017.

Suddenlink’s bundle offerings have been rationalized and streamlined, as well introducing more localized pricing and adding back back Viacom content to the – at the end of 2017. Together with the full commercial launch of Altice One at Suddenlink expected across Q2 and Q3 2018, and continuous upgrades to our broadband network.

These new offers are expected to contribute to improve customer mattresses later this year. Moving to Slide 8 is a summary of the Business Services division. Overall, B2B grew at 5.5% year-over-year in fiscal year 2017, driven by superior SMB growth of 7.5%. SMB represents about two-thirds of total B2B revenue.

The Enterprise & Carrier represents the other approximately one-third of total B2B revenue growing 2.3% in 2017. Proportionally, we have a larger Enterprise & Carrier business than many of our peers, mainly due to the Lightpath business we inherited from Cablevision.

As a reminder, Lightpath provides enterprise-grade fiber connectivity bandwidth and managed services to enterprise customers, which we market as Altice business. Turning to Slide 9 in our advertising business.

Recall, we acquired two small businesses called Audience Partners and Place Media in 2017, which enables multiscreen addressable and national targeted advertising capabilities. We are now very sophisticated in this area and is a strong growth driver for us. We can now reach all U.S.

Internet households with targeted digital advertising and over a 100 million TV households with targeted video advertising. Separately, we recently announced the formation of a new New York DMA Interconnect to provide a one-stop advertising solution that will reach 6.2 million households.

We’ve also combined our internal and customer-facing marketing capabilities into a single unit now. So that we’re reporting our data analytics businesses within the advertising division, which is showing the fastest growth currently.

In our legacy advertising business, we had a tougher political comp in Q4 impacting revenue growth year-over-year in the Suddenlink market in particular, but ratings at our local news channel News 12 remains very strong. I’ll turn to our new fiber build in a minute.

But first on Slide 10, I just wanted to highlight that Altice USA continues to rollout enhanced data services to its customers on its existing coax cable network, which is supporting an increasing number of consumers that are selecting increased broadband speeds.

Before we took over Suddenlink and Cablevision, only 16% of the total customer base could receive higher than 100 megabits download broadband speeds. At the end of 2016, we had upgraded the whole Optimum footprint to offer up to 300 megabit speeds, which meant 83% of the total Altice USA footprint could then receive these speeds.

As of the end of 2017, we had taken this even further as 95% of the Optimum footprint and 86% of our total Altice USA footprint can now receive up to 400 megabit speeds. At the same time, we continue to upgrade the Suddenlink network with 72% of this footprint, or 29% of the total Altice USA footprint able to receive up to 1 gig.

But we are not stopping here and we’ll continue to widen the availability of faster and faster speeds. These upgrades have allowed us to meet customer demand for higher broadband speeds, with 90% of our gross additions taking speeds greater than 100 megs.

And the average broadband speed taken by Altice USA’s customer base more than doubled to 128 megs at the end of 2017, with average daily usage per customer now reaching about 200 gigs, as customers are now using our broadband services more and more. Now on Slide 11, I want to go through our new investments in the new innovative services.

First, Altice One. This is our new entertainment platform with an all in one box, including TV, Internet, Wi-Fi, integrated app such as Netflix and voice activated remote control. It’s a step change compared to the previous video offerings and the initial feedback we received from customers has been great.

The service includes an improved Wi-Fi experience for a high-speed broadband service as there are many TV boxes double up as Wi-Fi repeaters around the home. This is a key part of our strategy of enhancing the customer experience and we’ll have the capacity for ongoing upgrades and the addition of new apps as they become available.

Second, our new fiber FTTH rollout. We plan on accelerating the rollout in 2018 with the first commercialization of FTTH services later this year.

As well as helping to reduce our network and customer operation costs further, the new FTTH network will benefit customers by enabling for a more connected home and by delivering faster speed and a high-quality service experience. Lastly, the full MVNO agreement we have signed with Sprint.

We are commencing the core network development now in 2018 with a commercial launch planned by 2019. This will be a new area of growth for us and we can leverage expertise in the Altice group and how to position this to our customers within bundles to help reduce churn and drive ARPU.

And with that, I’ll turn this over to our CFO and Co-President, Charlie Stewart to run through some more of our financial figures..

Thanks, Dexter, and hello, everyone. On Slide 12, we summarized Altice USA’s margin progression, or you can see we are at 44.1% adjusted EBITDA margin in the fourth quarter, with the operating free cash flow margin at 34.5%.

If you look at the full-year 2017 figures on the left, our reported operating free cash flow margin of 32.3% is substantially higher than where we were when we started in 2015, which was at 17.3% on a pro forma historical basis. Note that in the fourth quarter, Suddenlink margins were impacted year-over-year from adding back Viacom content.

And as Dexter flagged last month, it’s worth noting that we had an expense from our recent Tivo settlement in the fourth quarter, which won’t be recurring. We simplified the organization and have more we can do here to take margins even higher, while maintaining investment in all the new growth areas that Dexter just mentioned.

Turning to Slide 13, it’s a breakdown of our CapEx, where you can see that we began in 2017 to increase investment in network infrastructure related to our new FTTH rollout.

CPE spend will also increase further in 2018 to support the Altice One rollout, although our average cost of CPE per home connected will be slightly lower as we’re consolidating a lot of the legacy equipment into just one box now.

And as we mentioned before, we’ll start in 2018 to allocate some investment into our network to accommodate our full-year – our new full MVNO agreement, but this will not in itself significantly change our CapEx budget. Slide 14 shows the view of our underlying free cash flow generation and summary of the recent tax reform impact.

In 2017, on the left, you can see that we generated just over $1 billion of free cash flow, which is after $138 million of cash restructuring costs in the year. Other investing activities includes M&A, such as the acquisition of Audience Partners, which Dexter referenced.

And in financing activities, you can see that we paid out over $900 million in cash dividends in 2017. In addition to that, we received approximately $350 million of primary IPO proceeds, which was used to repay debt. Cash taxes were $29 million in the year as we benefit from our NOLs, which were $2.7 billion as of the end of the year.

In addition, following the tax reform, including reduction of the federal income tax rate, we’ve recognized non-cash deferred tax benefit of $2.3 billion. Altice USA is not now – is now not expected to be a significant cash tax payer until 2020, which is different from 2019 previously.

And the new lower rate in 2018 will significantly reduce our cash taxes in 2020 and thereafter. Turning to Slide 15, you can see on the right that Altice USA’s leverage continues to come down rapidly to 5.1 times on a reported LTM basis as of the end of 2017.

This is after the approximately $900 million of cash dividends, which I just mentioned that were paid out in the last 12 months, otherwise leverage would have been even lower. You may recall that when we started at the time of the acquisition, Suddenlink in Cablevision had a leverage level of approximately 7 to 7.5 times.

We have reduced our target leverage to 4.5 to 5 times, which we’re very comfortable with given our pace of cash flow growth, and we’ve got a strong liquidity position of $2.3 billion.

Pro forma for the $1.5 billion special cash dividend to be paid out later in 2018 in conjunction with the spin-off Altice U.S., Altice USA’s leverage was about 5.5 times debt to EBITDA at the end of 2017. But clearly, by the time of the separation when the dividend is actually paid, we expect our leverage to be lower again.

And by the end of the year, we’re confident we’ll be back within the target range giving us options for further shareholder returns. Turning to Slide 16, we show a summary of our debt maturity profile pro forma for the $1.5 billion dividend and our recent refinancing in January 2018.

On this basis, our weighted average life of debt is 6.3 years, with a weighted average cost of 6.2%. We have no major maturities of Suddenlink until 2021, a near-term maturities at Optimum are covered by our $2.3 billion revolving credit facility. And finally, turning to Slide 17 and our guidance for Altice USA for 2018 and our medium-term outlook.

In 2018, we expect our total revenue growth of approximately 2.5% to 3% compared to 2017. This is likely to be more second-half weighted as we’ve implemented a rate event at the end of 2017 that was much lower than last year’s and we’ve also adjusted the timing of our 2018 planned rate event.

In addition, given the midterm elections, the political advertising comparison will be more favorable later in the year. With this in mind, Q1 is likely to be the low point of growth for the year, which includes some temporary disruption from our recent Starz dispute.

With Starz, we believe we got a mutually attractive renewal with the valued programming partner and we expect the annual inflation of programming rates overall to be contained to high single digits per customer.

Over the medium to long-term, we’re confident with revenue growth and further realization of efficiency savings that we can further expand Altice USA’s adjusted EBITDA and cash flow margins. Please note that we’re not able to give profit guidance for 2018 at this time due to the current regulatory processes.

And lastly, annual CapEx, we expect to be around $1.3 billion for 2018, including all of the new growth projects we’ve outlined in this presentation. And with that, I’ll stop and turn it back over to you Nick and open it up to Q&A. Operator, please go ahead..

[Operator Instructions] Your first question comes from the line of Bryan Kraft of Deutsche Bank. Please go ahead. Your line is open..

Hi, good afternoon. Thanks for taking the question. I guess, I had a couple of quick ones.

One, I was wondering if you could comment on what the impact of the Starz outage might be on video subscribers in the first quarter to the extent it’s meaningful? Secondly, I guess, I wanted to ask you if you have an opinion on why Altice USA’s stock price has been so highly correlated to NV stock price even after you announced the separation? And then lastly, Charles, I know you said you can’t give profit guidance for 2018.

But I guess, I just want to ask about the guidance you did give on margin expansion being medium to long-term. Should we interpret that to mean that there wouldn’t be margin expansion in 2018, or is that the wrong interpretation? Thank you..

Maybe I’ll take the first couple of questions and then I’ll hand it to Charlie. On the Starz outage, listen, we had a protracted dispute with them for about six weeks. It was very prevalent in the New York Tri-State area. And thankfully, we both came to a very mutually attractive transaction at the end of day.

I don’t think we’re giving any particular guidance on the impact.

But I do think that within Charlie’s discussion on guidance in the first quarter that’s clearly taken into account that first quarter in the first-half this year will be a little bit weaker relative to the second-half one, but not only because of the Starz dispute, but secondly, really driven by the timing of our rate events and the political year that we have here in the advertising market.

But that was just a little bit of a blip for us in the first six weeks of the year, which probably translates really into the first couple of months. On the Altice USA stock price, I think we’re smart enough to understand any of this. I think that it’s clear that the small free float at Altice USA plays – played a role.

I think, the interplay between Altice USA stock and Altice N.V. stock for those who are trying to isolate the European implied stock price is another play here.

I think, we’re just very much focused on completing the spin-off, which is really driven by some very standard regulatory processes that just take time, and then thereafter we’ll have a much bigger free float, a very independent couple structure and a very attractive shareholder remuneration program in place, which speaks for itself, right?.

Yes, just to maybe elaborate a little bit on margins, Bryan, our strategy really is just to complete the implementation of all of our planned efficiencies that are focused on KPIs, which will improve our revenue growth, and of course, the investment in innovation and growth things like Altice One or FTTH build out and now starting our MVNO.

All those things we think will serve to further expand margins over the medium to long-term.

But really because of the securities filings that are required to be made in Europe in connection with our separation from Altice N.V., we’re just restricted in how specific we can be in our public statements regarding adjusted EBITDA margins in the near-term.

And I would just maybe note that we have given our medium-term efficiency targets previously and we haven’t changed those medium-term goals..

Okay, thanks.

Can I just ask one quick follow-up? Any – can you give any specificity as to when you think in the second quarter the spin-off will close?.

I don’t think we’ve got a pure date in mind. The processes are very much aligned based on various time deadlines from all the various regulatory agencies, both in the U.S. and in Europe who need to review the transaction. I think, we’ve been pretty clear that this is a Q2 event.

I would guesstimate that were early June, maybe a little bit earlier than that..

Okay. Thanks very much..

Your next question comes from the line of Brett Feldman of Goldman Sachs. Please go ahead. Your line is open..

Thanks for taking the question, and two, if you don’t mind. You talked about how you’re going to be commercializing fiber at some point this year.

And so question we’ve been getting is, when you rollout fiber in markets we’re already up against a fiber provider like FiOS, how are you going to make sure that you are able to show the consumer that you differentiated to probably win back some customers you might have lost previously? And then just, it does seem like you will be and I think you’ve acknowledged this you’re going to be above your target leverage when you complete the spin.

Your buyback is going to become effective, I believe, when you complete the spin. Do you need to be in your targeted leverage range to take advantage of that buyback to start using it, or could you use it at your discretion once the spin-off is completed regardless of where your leverage is on any given day? Thanks..

So on the fiber rollout, we’re rolling out a fiber network, which I don’t know what the right analogy is, but it’s a 3.1 versus maybe the 1.0 that maybe is in certain of our competitive environments, right? So I think we could clearly differentiate just purely on service and speed as a starting point relative to what’s available competitively in our markets with FiOS.

We haven’t made a decision as to what we’re going to do from a commercial standpoint. But in terms of the speed capabilities, we’ll be at the ability to do higher speeds than the competition. Why don’t I hand it to Charlie on the leverage issue..

Yes. Hi, Brett. There’s no specific restriction about the ability to use the buyback facility as a function of leverage. But obviously, we put our target leverage goes out there for a reason, and so it’s a consideration. We delever quite quickly. We have and we expect to continue to do so given our free cash flow generation.

And – but of course, the time of the – at the time of the separation, there’s often technical reasons why flow back and so on why it’s an opportune moment to consider using a buyback, which is partly why we’ve put in place that to be effective at that point in time. So no specific restriction vis-à-vis leverage to answer your question specifically..

Great. Thanks for taking the questions..

Your next question comes from line of Ben Swinburne of Morgan Stanley. Please go ahead. Your line is open..

Thank you, guys. Good afternoon. Dexter, you mentioned some changes, not only a fewer changes, but sort of the pricing strategy towards the end of last year heading into 2018.

Just talk about how you’re thinking about rate adjustments today versus in the past, if things have changed? And if, so why, or if it’s just sort of timing of when tings are being implemented? And then maybe for Charlie, are there any expenses in that we should be thinking about in 2018 associated with the sort of scaling up of your wireless business? Is that significant, or will that be relatively modest until we get into 2019 when you launch? Thanks..

Ben, thanks. On the first question, we’ve spent the last two years working to harmonize the basis and the pricing approaches and the billing practices across both footprints. And that’s not just the simple as doing it across two customer basis.

But as you may know, the Suddenlink footprint in itself had about five or six different customer bases that need to be harmonized, both from a technological standpoint and an IT basis, but as well as some harmonization as to what the right billing practices were.

What were the onboarding practices and how we thought about pricing as such thing that are sport surcharges, broadcast surcharges, set-top boxes and those type of things. That led to many various different changes in rate policies and moving people between packages over the last two years in the customer base.

All of that activity was probably more than we ever wanted to or anticipated as harmonizing all the different variables is not that easy. And so we made a very concerted effort to not implement a usual or industry like price increase at the end of 2017, given all the various changes that happened over both customer bases as we harmonize them.

That’s really why the comp in Q1 will be weaker and that will also drive us to a rate event strategy in 2018, which is going to be different than what it has been historically. But it’s going to kind of change the year-over-year comparisons on the quarters, which we’ll talk through when we actually do those. But we’re giving guidance for the year.

We feel comfortable with the guidance. We’re just giving you heads up in terms of the timing based on how we set up the rate events.

And on expenses?.

Yes, on the MVNO, Ben, we’ve said that we expect the commercial launch by 2019. So this year, we’re really beginning work on the core network in advance of that launch. So not that sort of heavy – heavier part of any spend perhaps.

And certainly, as we get closer to the launch, we’ll give an update on our targets and our expected cost levels at that point..

Okay, great. Thank you, guys..

Your next question comes from the line of Craig Moffett of MoffettNathanson. Please go ahead. Your line is open..

I guess, it’s sort of a 40,000-foot question for Dexter, if I could. You’ve now been what your nine months, I guess, past the IPO, the growth rate of video has clearly decelerated for the whole industry with court cutting accelerating and the unit growth for broadband for the industry has slowed down.

What have you learned that’s different than what you expected to find in the U.S.

market since you’ve been running Cablevision? And since you’ve been running, both Suddenlink and Optimum and what have you learned company specific that’s different than what you expected?.

That’s – I think I have to take that up to 100,000 feet, Craig. Listen, I think there’s a lot of valuable things that we’ve learned over the last couple of years.

Number one, I think, we truly believe that that Cablevision and all the opportunities that we’ve seen on Cablevision make it probably one of the, if not the most attractive cable footprints in U.S., when the market thought, it was probably the most or at least an attractive footprint.

And we say that, because one, obviously, the OpEx and CapEx opportunities to drive free cash flow were significant. But secondly, we took a business that was barely growing, if not decelerating from a revenue standpoint and have moved it to north of 3% revenue growth consistently over the last couple of years.

And we also face a future, which the large part of competition, which is hitting many of the less competitive areas in the U.S. is behind us.

And so we’ve got not only the – probably the most attractive demographics, but also competition that’s behind us and it allows us to kind of drive a lot of different things in terms of ancillary revenue streams, which we didn’t expect such as advertising and mobile in such quick order.

So that’s probably been a real 10-plus winner for us in terms of unexpected things that we’ve realized.

I think on the Suddenlink side and overall cable standpoint, I think, the overall consolidation dynamics in the market and the real acceleration in terms of convergence is probably something that no one can really have foreseen, and how that impacts the various parts of our business, both on the down side and on the up side? And I think we just have to deal with it, right, which is there’s – this is a great business.

We have great infrastructure. We continue to drive upgraded networks with consumers that are looking to consume more and more bandwidth, we’ve got a poll position in terms of our competitive position in all of our markets.

And it’s for us to be nimble and flexible enough from an organization standpoint, from a decision-making standpoint to allocate our capital appropriately. 2017 was a real transformative year to get the financials that have been stronger than we expected.

But it’s really about signing up with a full MVNO launching FTTH, launching Altice One, investing heavily in targeted addressable and national, digital and linear advertising things that we never would have expected to get into as quickly and have done so much so quickly. So I’d say that our experience from over the last two years running U.S.

cable has been probably a 9 to 1 on the positive side versus anything that was unforeseen. Hopefully, that’s a high-level enough for you..

That’s very helpful. If I could ask a quick follow-up. To your point about Cablevision being surprisingly strong territory. Certainly, consistent with our observation that broadband growth, for example, has held up better in the face of competition at Cablevision.

But growth has been a bit slower than we would have expected at Suddenlink, despite reasonably low penetration.

Why is that? Is it your sense that broadband is turning out to be a more price elastic product than we would have thought, or why is penetration remaining sort of stubbornly low in this – in the Suddenlink market?.

I think there’s a couple of factors there. I do think there is a price elasticity issue, which we addressed in the fourth quarter and we’re seeing the benefits of it coming in here in the first quarter of this year.

I do think that my comment on the convergence issue in the sector has driven some competitors to be super aggressive in gaining market share at an economic rate, both on the wireless side, coupled with video, investing in their networks even if the broadband speeds are low, but coming at very aggressive price points and OTP players obviously being aggressive.

And I think also, you have to remember that the less competitive areas, as we like to call them, are also less attractive from an overall economic demographic.

And so really not all sizes are equal here and we see the differences in the footprint, particularly being in the New York Tri-state area, where we’re in the most rich, let’s call it, demographic, highly dense, a very multicultural, lots of live sports teams here and a healthy competition between us and FiOS, which makes the price points attractive from a triple play standpoint, makes it very difficult for third parties to come into these markets either on an overbill basis or even on a video basis and come up with an attractive proposition relative to us.

So there are just different shades of grades in the U.S. It’s – we like to say internally, we’re in 20, 21 different countries here as opposed to one single country. And we just need to be much more nimble and local in certain of our markets depending where we are..

Thank you. That’s helpful..

[Operator Instructions] Your next question comes from the line of Kannan Venkateshwar of Barclays. Please go ahead. Your line is open..

So, Dexter, from your perspective just following up on Suddenlink, when you look at trend lines in that base, last quarter there was a little bit of pressure and I think you highlighted some more pressure this quarter.

Is this something you’re seeing purely from the perspective of wireless-only subscriber base growing within that footprint? So there has been some data suggesting that the base of homes with wireless-only is growing. And just wanted to get a sense of whether that demographic is more exposed to that than other parts of the country? Thanks..

No, I don’t think we’re seeing a concerted movement that way. I think the – we’re seeing having adjusted our offers across various levels of the footprint to being more competitive over the course of the fourth quarter are starting to bear good fruition in the first quarter.

I think coupled with the launch of the Altice One box in Q2 and Q3 over the Suddenlink footprint, we should see a return to much more attractive trends in our subscriber base, right? So even though the financial KPIs looks good in 2017, the volume numbers came off, and we’re very much focused on balancing the volume versus the financial KPIs in driving that in 2018, which we’re already started seeing the – in the first quarter, right? The Starz impact was really not of an impact that we saw on the Suddenlink footprint that was very much of an Optimum-only effect very much like when FiOS dropped Univision, we took the advantage in the competitive zones in Optimum and vice versa and we saw pressure on our subs in the FiOS zones over the first couple of months of the year due to the Starz dispute, right? So that’s just ping ponging of timing depending on where we are in our various disputes with some of our partners.

But we’re not seeing a degradation in any shape or form over the Optimum footprint from the penetration or competitive standpoint. But to your point on Suddenlink, no, we don’t see that trend today..

And one follow-up question on Altice One.

What kind of a price point is the new products supposed to be add link? What kind of an ARPU deal, when should we expect from that?.

Well, effectively, we’re depending on how many additional set-top boxes you have or TV’s you have, about a $10 impact on gross add ARPUs based on equipment. Effectively today depending on whether you’re going to be in the Suddenlink footprint or in the Optimum footprint.

But in the Suddenlink footprint – and these are in the Optimum footprint, you pay $10 for your set-top box and $5 for a modem. And Altice One box, which is all in one comes at a $25 price tag and then you have the additional mini-box on top. So effectively, if you just had one TV, you’d have a $10 ARPU change on the gross adds..

All right. Thank you..

Your next question comes from the line of Jessica Reif of Bank of America Merrill Lynch. Please go ahead. Your line is open..

Thanks. I have two questions. You say in the release and on your slides that you’re offering – 86% of your homes you’re offerings speed of 400 megabit.

Can you just talk about some of the reasons why or how you’re marketing that – those kind of speeds like how you upside people to that – those speeds? And then second different topic, can you give us any color on Viacom coming back on Suddenlink? Is it fully on and what impact does that had on subs and at all in advertising?.

Sure, Jessica. On the speeds, listen, we have our coax network in the Optimum footprint, which we either go and push to a DOCSIS 3.1 type of architecture and investment cycle, or we push it as far as we can without spending too much money dropping deeper fiber or CMTSs and take it to its limit.

And so effectively today, we probably have an upper limit depending on penetration levels of 600 megs on our current network, so we’ve gone up to 400 megs a system wide.

But fundamentally, we’re not seeing a big amount of penetration there, I think it has been a good counter to the 1 gig, or the almost 1 gig FiOS offer and customers really value the ability to have higher speeds and the better service that we have over at Optimum than FiOS, which is why we’re not really losing any market share relative to FiOS.

So it’s more of a mind-share discussion. The bigger chunk of our onboarding is really at the 100 and 200 meg level on Optimum. On the Viacom, so maybe I’ll just hand it to Charlie, in terms of all that..

Yes. Sure, Jessica. Hi, Viacom is now over 90% available in the Suddenlink markets and much of that happened during the fourth quarter. And it’s early days, but certainly, anecdotally, it’s been positive. We see some improvement on things like video selling levels and non-video customers adding video that sort of thing.

So, it’s certainly something that we think and feel that’s being received well. But I just note that, we’re also pleased with our – with the agreement that we’re able to reach with Viacom, which is really not just Suddenlink programming, but a broader partnership that includes some opportunity in areas like advertising..

Okay.

And just as a follow-up, can you talk a little bit about what’s involved in that advertising agreement?.

Well, it’s – we have a host of products now, as I mentioned in our presentation, where we’re able to offer addressable on a linear basis, on a national basis, targeted IP digital, advertising on a national basis.

And obviously, with our focus and our stronghold on the local markets here and the formation of the New York interconnect covering the entire New York DMA, we think we’re really well-positioned here to compete, both nationally on linear and digital, but as well as really strengthened our hand on the local market, particularly with all the access to the data we have in the local DMA, right< So I think, where you see some other people in the sector having down quarters or down years on advertising, we’ve booked the trend because of the suite of products, right? So literally, we are winning national contracts from some of the larger advertisers and you can think out there because of our new capabilities.

The business of the Place Media business was a tiny, tiny business doing $5 million of revenue $5 million, $6 million of revenue last year and we’re blowing through those expectations for this year because of our ability to kind of drive these national campaigns in a very organized and coordinated way, and we can go out there and have the muscle to go market it to the national advertisers out there in both ad agency, as well as direct to the advertise themselves, right? So it’s really – think about just all the suite of products that that many people are able to do out there, we’ve got a big chunk of those..

But if Viacom is helping in those efforts, would you try to expand that to other content companies?.

Yes. We absolutely have already. So existing relationships we’ve had that were borne by data analytics have now turned into advertising relationship with programmers. Other MVPD’s are using our technology as well and our platform to drive advertising campaigns, both on a more target basis and on a national basis, right? So it’s really two things.

One, the products are national and on multiple and many different things that we can do.

But secondly, we’ve really diversified the client base, which was historically just programmers in terms of data analytics into managed services and programmatic and optimize linear addressable advertising across the full board, right? So we are in dialogues with all the largest ad agencies, the largest international organizations who are looking to advertise in the U.S., healthcare, political on a national basis, financial services, all the guys that you would think of we are currently having dialogues with or working with in this space.

And so we’ll have more to talk about in the first and second quarter of this year. But the early signs having just put all these little pieces together and put some investment and investment in headcount to drive a sales force is starting to look very attractive..

Thank you..

Your next question comes from the line of Philip Cusick of JPMorgan. Please go ahead. Your line is open..

Hey, guys, thanks a lot. You talked about the fiber rollout earlier.

Can you talk about where the price of rollout looking now versus your original expectations? What have you heard back in terms of bids to rollout that fiber? And what are you doing in terms of – and for yourself through ATS versus outsource?.

So there’s couple of questions. I think, number one is, we are delivering on our expected price points. So which we think are very attractive relative to the expectations the market had as to what it would cost. Secondly, it’s a 100% being done in-house by our existing workforce. That has been moved into this ATS division.

But as you know, ATS is now owned by AT U.S. again. But that does not change in terms of dynamics of how we’re operating the business, which is in a self-contained unit to drive the real tensions and know-hows of the supplier would do.

And I think the only thing is, we’re probably a couple of quarters behind, which I think in my almost 10 years with Altice, it’s probably the least have been behind when we start something off.

So we always are – know that it takes a little bit of growing pains to get the machine moving, getting the right piece in place, getting the permits in place, getting all the processes, getting the trucks, all those things. Now we are moving at a very nice pace.

And so we’ll have more to talk about, but the idea would be for us to commercialize in a secular third quarter of this year a fiber product, right?.

Maybe that’s a good opportunity, Charlie, to remind us of the impact of financials of rolling out ATS back into the P&L?.

Yes. So just to build on what Dexter said, we completed the acquisition for a nominal amount of Altice is 70% in January. And we had announced in our S1 that the impact through September – in the first three quarters of last year was in the mid-$20 million range.

For the full-year, it’s actually – it’s more like a low-$20s, and you’ll see that number in our 10-K when we publish it. And then in 2018, we expect that as ATS would have been profitable that is accretive to our Altice USA..

Thanks, Charlie..

There are no further questions at this time. I will turn the call back over to the presenters..

Thank you very much for joining. And if you have any follow-up questions, do let us know, and we look forward to catching up in the next few weeks. Thank you..

Thank you..

This concludes today’s conference call. You may now disconnect..