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Altice USA Reports Third Quarter 2018 Results

November 5, 2018 4:05 PM

Altice USA Delivers Its Best Financial Performance

+4.1% YoY Accelerated Revenue Growth, Highest Ever Adjusted EBITDA(1) margin

+28% YoY Free Cash Flow(2) Growth

Improved Residential Customer Trends

Continued Differentiated Investments in FTTH, Mobile, Altice One and Advanced Advertising

Share Buyback Target up to $500 Million in 2018 ($241M in Q3); 2018 Total Return $2 Billion(3)

Successful Debt Silo Transaction Will Strengthen Credit Profile and Simplify Structure

NEW YORK--(BUSINESS WIRE)-- Altice USA (NYSE: ATUS) today reported results for the third quarter ended September 30, 2018.

Dexter Goei, Altice USA Chief Executive Officer, said: "We are extremely pleased to present Altice USA’s best financial performance yet, including improved subscriber trends, accelerated revenue growth, highest ever margin and material growth in free cash flow. We are delivering on our differentiated investment thesis anchored in infrastructure-based investment to future-proof our business, to enhance the customer experience and services offered, and to reduce costs over the long-term. This is demonstrated by having just completed the initial launch of the Altice One entertainment platform, launching fiber (FTTH) broadband services and progressing very quickly with preparations for the launch of Altice Mobile in 2019. Separately, the entrepreneurial spirit of our dynamic management team has allowed us to build a differentiated advanced advertising platform in under two years, competing on a national basis, and developing a new core competency. Finally, rapid deleveraging down to our target range is now facilitating material shareholder returns, with approximately $2 billion in dividend and buybacks set to be returned during 2018 and further returns planned for 2019.”

Altice USA Key Financial Highlights

�
Three Months Ended September 30,
($k) 2018 � 2017
Actual Actual
�
Revenue $ 2,417,801 $ 2,322,521
Adjusted EBITDA(1) 1,070,525 1,012,314
Net income (loss) attributable to Altice USA, Inc. stockholders 32,553 (192,569 )
Capital Expenditures (cash) 334,527 255,329
�

Altice USA Operational Highlights

Altice USA 2018 and Medium-Term Financial Outlook

For the full year 2018 Altice USA expects:

Altice USA also reiterates its plan to further expand its Adjusted EBITDA and cash flow margins over the medium- to long-term.

Additional Q3 2018 Highlights

Product & Service Enhancements

In the third quarter, Altice USA continued expanding the availability of Altice One, the all-in-one entertainment platform that combines video, internet and connectivity into one experience. The initial roll out of Altice One across Optimum and Suddenlink regions is now complete, with availability to over 80% of Altice USA’s whole footprint. A further update to the Altice One Operating System (OS) was also launched in the third quarter with new features for customers such as out-of-home DVR functionality.

Network Investments to Enhance Broadband Speeds, Video Services and Reliability

Altice USA’s fiber-to-the-home (FTTH) deployment continues to progress well with the company launching up to 1Gbps symmetrical 1P fiber broadband services with an advanced wireless gateway for Optimum customers in select areas of Long Island in the third quarter of 2018. Altice Gigabit fiber service provides a next-generation connectivity experience to support the most data-intensive activities, from streaming 4K ultra-high-definition (UHD) and high-definition (HD) video on multiple devices, online multi-player video game streaming platforms, video chatting, streaming music, high-quality virtual-and augmented reality experiences, and downloading large files simultaneously on dozens of devices at once.

While building the FTTH network, Altice USA also continues to roll out enhanced broadband services to its customers on its existing hybrid fiber coax (DOCSIS) cable network. 1Gbps broadband services are expected to be available across the whole Optimum footprint in 2019 through Digital Switched Video upgrades. In addition, further 1Gbps capacity will be added in certain areas in the Suddenlink footprint, as well as continuing to build new homes at an accelerated pace. As a result of recent enhancements to Altice USA’s network and with the launch of Altice One, an increasing number of consumers are selecting increased broadband speeds and using more data:

In addition, Altice USA continues its video QAM to IP transition on its cable network to enhance its video service delivery, and Altice One has been enabled for both QAM and IP video to support the transition.

The company’s focus with these network upgrades is on improving the quality of broadband WiFi / video services and cost efficiencies as well as boosting speeds. As well as initially expanding the availability of 1Gig broadband services, the upgraded coax network and new FTTH network will both be IP-based which is optimal for multi-device service offerings and will be access network technology (fixed and wireless) agnostic in the way services are offered to consumers. Continuous user interface improvements will be possible, and the upgrades will enable CPE cost reductions, as well as additional network cost efficiencies.

Mobile

During the third quarter, Altice USA continued developing the core network to support its infrastructure-based MVNO including upgrading and expanding its WiFi network. Altice USA’s full MVNO agreement with Sprint is differentiated from other light MVNOs in that it gives the company full access control, including over its own core network, Home Location Register (HLR) and SIM cards. This will allow for Altice USA to fully control seamless data offloading and the handover between the fixed and wireless networks. In addition, Altice USA will have full product, features and marketing flexibility with its new mobile service. The connection to Sprint microsites to support Sprint’s network densification, which will benefit Altice USA’s MVNO service as well as providing the company with better economics, is currently running well ahead of schedule and these densification efforts have proven to be successful already. According to Speedtest Intelligence, Sprint is the most improved network on Long Island with 135% YoY increase in average download speeds(4). The commercial launch of a mobile service for Altice USA customers is still on track for 2019.

Advertising and News

a4, the cross-screen addressable advertising company launched by Altice USA, announced in the third quarter a partnership with AT&T’s advertising business, Xandr, which will now have exclusivity to sell Altice USA's addressable TV inventory at the national level. As part of the deal, a4 will benefit from access to video subscriber data from AT&T’s vast customer network that will help inform Altice USA's national addressable digital campaigns and multi-screen campaigns at the regional and local levels.

Additionally, a4 launched the next version of its all-in-one media marketplace and planning platform, Athena, which allows advertisers of all sizes to simply plan and execute highly targeted campaigns across all screens inside and out of the home in minutes.

The Altice USA News division continues to perform well. News 12 Networks in the New York tri-state area remains the most-watched TV network among Optimum customers, with digital viewership growing by nearly 20 percent. The channel recently launched in three new counties in the New York Hudson Valley, and News 12 recently unveiled its plans to build a new advanced broadcast center and studio on Long Island. i24News in the U.S. also continues to grow through a recently signed deal with a major U.S. cable provider, with the channel to launch on its systems later this year.

Share repurchases

In conjunction with the separation from Altice Europe NV (Euronext: ATC, ATCB), the Board of Directors of Altice USA authorized a share repurchase program of $2.0bn, effective June 8, 2018. Under the repurchase program, shares of Altice USA Class A common stock may be purchased from time to time in the open market and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. From inception through September 30, 2018, Altice USA repurchased an aggregate of 13,219,909 shares for a total purchase price of approximately $241m and is targeting a total amount of repurchases up to $500m by the end of 2018. The acquired shares were retired and the cost for these shares was recorded in paid in capital in Altice USA’s condensed consolidated balance sheet. As of September 30, 2018, Altice USA had 723,849,057 combined Class A and Class B shares outstanding.

Combination of Suddenlink (Cequel) and Optimum (Cablevision) Businesses under Single Credit Silo

Following the initial public offering of Altice USA and subsequent separation from Altice Europe NV, on October 2, 2018, Altice USA announced its intention to further simplify its structure and operations by combining (the “Combination”) the Suddenlink (Cequel) and Optimum (Cablevision) businesses under a single credit silo.

The Combination marks a significant milestone in the integration of the Suddenlink and Optimum businesses and aligns Altice USA’s debt capital structure with the way Altice USA is managed: as a unified company with a common strategy.

The Combination will result in a more diversified credit silo which is expected to simplify Altice USA’s financing strategy and financial reporting requirements. The Combination is leverage neutral for Altice USA.

The Combination is being effected mainly by the following transactions:

The closing of the Combination is subject to regulatory filings and approvals and other customary conditions.

On October 15, 2018, Altice USA announced that CSC Holdings, LLC (“Optimum”) successfully entered into a new $1.275 billion 7-year Senior Secured Term Loan B maturing January 2026 (the “Senior Secured Term Loan B”), providing for the refinancing of the entire $1.25 billion principal amount of loans under Cequel’s existing Term Loan Facility and other transaction costs related to the credit silo Combination. The new Senior Secured Term Loan B will have a margin of 225bps over Libor and was issued with an original issue discount of 25bps.

On October 30, 2018, Altice USA announced acceptance of 99.64% or $5.5 billion of Original Notes of the Suddenlink silo tendered for exchange. In addition, Altice USA announced it had received the relevant approval from the FCC relating to the Combination.

Financial and Operational Review

For quarter ended September 30, 2018 compared to quarter ended September 30, 2017

�
Altice USA Consolidated Operating Results
(Dollars in thousands, except per share data)
�

Three Months Ended
September 30,

2018 �

2017 (6)

Actual Actual
Revenue:
Pay TV $ 1,054,667 $ 1,069,946
Broadband 729,907 658,278
Telephony 161,351 172,479
Business services and wholesale 344,193 324,642
Advertising 123,066 89,292
Other � 4,617 � � 7,884 �
Total revenue � 2,417,801 � � 2,322,521 �
Operating expenses:
Programming and other direct costs 790,533 755,101
Other operating expenses 569,070 570,111
Restructuring and other expense 16,587 53,448
Depreciation and amortization � 536,053 � � 823,286 �
Operating income 505,558 120,575
Other income (expense):
Interest expense, net (388,167 ) (378,105 )
Gain (loss) on investments and sale of affiliate interests, net 111,684 (18,900 )
Loss on derivative contracts, net (79,628 ) (16,763 )
Gain (loss) on interest rate swap contracts (19,554 ) 1,051
Loss on extinguishment of debt and write-off of deferred financing costs — (38,858 )
Other expense, net � (186 ) � (2,984 )
Income (loss) before income taxes 129,707 (333,984 )
Income tax benefit (expense) � (95,968 ) � 141,550 �
Net income (loss) 33,739 (192,434 )
Net income attributable to noncontrolling interests � (1,186 ) � (135 )
Net income (loss) attributable to Altice USA stockholders $ 32,553 � $ (192,569 )
Basic net income (loss) per share $ 0.04 � $ (0.26 )
Diluted net income (loss) per share $ 0.04 � $ (0.26 )
�
Basic and diluted weighted average common shares � 732,963 � � 737,069 �
�

Reconciliation of Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA less Cash Capital Expenditures:

We define Adjusted EBITDA, which is a non-GAAP financial measure, as net income (loss) excluding income taxes, income (loss) from discontinued operations, other non-operating income or expenses, loss on extinguishment of debt and write-off of deferred financing costs, gain (loss) on interest rate swap contracts, gain (loss) on derivative contracts, gain (loss) on investments and sale of affiliate interests, net, interest expense (including cash interest expense), interest income, depreciation and amortization (including impairments), share-based compensation expense or benefit, restructuring expense or credits and transaction expenses.

We believe Adjusted EBITDA is an appropriate measure for evaluating the operating performance of the Company. Adjusted EBITDA and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry. Internally, we use revenue and Adjusted EBITDA measures as important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. We believe Adjusted EBITDA provides management and investors a useful measure for period-to-period comparisons of our core business and operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to the Company’s ongoing operating results. Adjusted EBITDA should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), and other measures of performance presented in accordance with GAAP. Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.

We also use Adjusted EBITDA less cash Capital Expenditures, or Operating Free Cash Flow, as an indicator of the Company’s financial performance. We believe this measure is one of several benchmarks used by investors, analysts and peers for comparison of performance in the Company’s industry, although it may not be directly comparable to similar measures reported by other companies.

�
Altice USA Three Months Ended September 30,
(Dollars in thousands) 2018 �

2017 (7)

Actual Actual
Net income (loss) $ 33,739 $ (192,434 )
Income tax expense (benefit) 95,968 (141,550 )
Other expense, net 186 2,984
Loss (gain) on interest rate swap contracts 19,554 (1,051 )
Loss on derivative contracts, net 79,628 16,763

Loss (gain) on investments and sale of affiliate interests, net

(111,684 ) 18,900
Loss on extinguishment of debt and write-off of deferred financing costs — 38,858
Interest expense, net 388,167 378,105
Depreciation and amortization 536,053 823,286
Restructuring and other expenses 16,587 53,448
Share-based compensation 12,327 � 15,005 �
Adjusted EBITDA $ 1,070,525 � $ 1,012,314 �
Capital Expenditures (accrued) 392,498 � 283,047 �
Adjusted EBITDA less Capex (accrued) $ 678,027 � $ 729,267 �
Capital Expenditures (cash) 334,527 � 255,329 �
Adjusted EBITDA less Capex (cash) $ 735,998 � $ 756,985 �
�
�
Cablevision Three Months Ended September 30,
(Dollars in thousands) 2018 �

2017 (7)

Actual Actual
Operating income (loss) $ 340,455 $ (3,103 )
Depreciation and amortization 378,549 656,122
Restructuring and other expenses 14,122 35,364
Share-based compensation 9,038 � 11,555 �
Adjusted EBITDA $ 742,164 � $ 699,938 �
Capital Expenditures (accrued) 262,095 � 192,391 �
Adjusted EBITDA less Capex (accrued) $ 480,069 � $ 507,547 �
Capital Expenditures (cash) 217,326 � 180,287 �
Adjusted EBITDA less Capex (cash) $ 524,838 � $ 519,651 �
�
�
Suddenlink Three Months Ended September 30,
(Dollars in thousands) 2018 �

2017 (8)

Actual Actual
Operating income $ 165,103 $ 123,678
Depreciation and amortization 157,504 167,164
Restructuring and other expenses 2,465 18,084
Share-based compensation 3,289 � 3,450
Adjusted EBITDA $ 328,361 � $ 312,376
Capital Expenditures (accrued) 130,403 � 90,656
Adjusted EBITDA less Capex (accrued) $ 197,958 � $ 221,720
Capital Expenditures (cash) 117,201 � 75,042
Adjusted EBITDA less Capex (cash) $ 211,160 � $ 237,334
�
�
Altice USA Customer Metrics (in thousands, except per customer amounts)
� Q1-17 � Q2-17 � Q3-17 � Q4-17 � FY-17 � Q1-18 � Q2-18 � Q3-18

Homes passed (9)

8,547.2 8,570.1 8,577.2 8,620.9 8,620.9 8,642.0 8,671.0 8,701.7
Residential (B2C) 4,548.4 4,536.9 4,529.0 4,535.0 4,535.0 4,543.4 4,539.8 4,534.9
SMB (B2B) 364.7 367.3 369.1 371.3 371.3 373.2 375.3 376.3

Total Unique Customer Relationships (10)

4,913.1 4,904.3 4,898.1 4,906.3 4,906.3 4,916.6 4,915.1 4,911.2
Pay TV 3,499.8 3,462.7 3,430.2 3,405.5 3,405.5 3,375.1 3,350.9 3,322.8
Broadband 4,002.8 4,004.4 4,020.9 4,046.2 4,046.2 4,072.6 4,082.1 4,096.3
Telephony 2,551.0 2,543.8 2,547.2 2,557.4 2,557.4 2,549.7 2,545.6 2,533.5
Total B2C RGUs 10,053.6 � 10,010.9 � 9,998.3 � 10,009.1 � 10,009.1 � 9,997.4 � 9,978.6 � 9,952.6

B2C ARPU ($) (11)

138.87 � 138.83 � 139.77 � 139.75 � 139.46 � 139.63 � 140.19 � 142.96
�
Optimum Customer Metrics (in thousands, except per customer amounts)
� Q1-17 � Q2-17 � Q3-17 � Q4-17 � FY-17 � Q1-18 � Q2-18 � Q3-18

Homes passed (9)

5,128.4 5,139.7 5,134.4 5,163.9 5,163.9 5,174.0 5,187.3 5,197.3
Residential (B2C) 2,886.9 2,889.1 2,887.0 2,893.4 2,893.4 2,888.0 2,889.7 2,882.8
SMB (B2B) 261.2 261.8 261.9 262.6 262.6 263.2 263.8 263.1

Total Unique Customer Relationships (10)

3,148.2 3,150.9 3,148.9 3,156.0 3,156.0 3,151.2 3,153.5 3,145.9
Pay TV 2,412.8 2,400.9 2,382.2 2,363.2 2,363.2 2,340.1 2,327.3 2,306.6
Broadband 2,636.4 2,646.0 2,653.1 2,670.0 2,670.0 2,673.4 2,681.3 2,682.9
Telephony 1,955.0 1,954.3 1,958.8 1,965.0 1,965.0 1,953.5 1,949.4 1,942.8
Total B2C RGUs 7,004.2 � 7,001.2 � 6,994.1 � 6,998.2 � 6,998.2 � 6,967.0 � 6,958.0 � 6,932.3

B2C ARPU ($) (11)

155.52 � 155.47 � 156.55 � 155.39 � 155.79 � 154.48 � 155.69 � 158.39
�
Suddenlink Customer Metrics (in thousands, except per customer amounts)
� Q1-17 � Q2-17 � Q3-17 � Q4-17 � FY-17 � Q1-18 � Q2-18 � Q3-18

Homes passed (9)

3,418.7 3,430.4 3,442.8 3,457.1 3,457.1 3,468.0 3,483.7 3,504.4
Residential (B2C) 1,661.5 1,647.8 1,642.0 1,641.5 1,641.5 1,655.5 1,650.1 1,652.1
SMB (B2B) 103.4 105.5 107.2 108.7 108.7 109.9 111.5 113.2

Total Unique Customer Relationships (10)

1,764.9 1,753.3 1,749.2 1,750.2 1,750.2 1,765.4 1,761.6 1,765.3
Pay TV 1,087.0 1,061.8 1,048.0 1,042.4 1,042.4 1,035.0 1,023.6 1,016.2
Broadband 1,366.5 1,358.4 1,367.8 1,376.2 1,376.2 1,399.2 1,400.8 1,413.4
Telephony 596.0 589.5 588.4 592.3 592.3 596.2 596.1 590.7
Total B2C RGUs 3,049.4 � 3,009.7 � 3,004.2 � 3,010.9 � 3,010.9 � 3,030.4 � 3,020.5 � 3,020.3

B2C ARPU ($) (11)

109.88 � 109.81 � 110.30 � 112.21 � 110.81 � 113.58 � 113.10 � 115.98
�

Consolidated Net Debt as of September 30, 2018, pro forma (PF) for Combination

� � � � � � � � �

Altice USA (Cablevision PF for Combination)
In $m

� � � Actual � � �

Coupon /
Margin

� � � Maturity
Guaranteed Notes 1,000 6.625% 2025
Guaranteed Notes 1,310 5.500% 2027
Guaranteed Notes 1,000 5.375% 2028
New Guaranteed Notes 1,096 5.375% 2023
New Guaranteed Notes 1,499 5.500% 2026
Senior Notes 526 8.625% 2019
Senior Notes 1,000 6.750% 2021
Senior Notes 1,800 10.125% 2023
Senior Notes 750 5.250% 2024
Senior Notes 1,684 10.875% 2025
New Senior Notes 1,241 5.125% 2021
New Senior Notes 618 7.750% 2025
New Senior Notes 1,046 7.500% 2028
Term Loan 2,963 L+2.250% 2025
Term Loan B-2 1,496 L+2.500% 2026
New Term Loan B-3 1,275 L+2.250% 2026
Drawn RCF 575 L+3.250% 2021
Other debt & leases � � � 27 � � � � � � � �
Cablevision Total Debt LLC � � � 20,906 � � � � � � � �
Senior Notes 500 8.000% 2020
Senior Notes � � � 649 � � � 5.875% � � � 2022
Cablevision Total Debt Corp � � � 22,055 � � � � � � � �
Total Cash � � � (486) � � � � � � � �
Cablevision Net Debt � � � 21,569 � � � � � � � �
Legacy unexchanged Cequel Notes 20
Altice USA Net Debt 21,589
Undrawn RCF 2,075
WACD (%) 6.4%
�

Altice USA Pro Forma Net Leverage Reconciliation as of September 30, 2018

In $m � � � � � � �

Altice USA

Pro Forma
Gross Debt Consolidated $22,075
Cash (486)
Net Debt Consolidated 21,589

LTM EBITDA GAAP(12)

4,113

L2QA EBITDA GAAP(12)

4,163
Net Leverage (LTM) 5.2x
Net Leverage (L2QA) 5.2x
WACD 6.4%
�
In $m � �

Altice USA Reconciliation to Financial Reported Debt

Actual � Pro forma
Total Debenture and Loans from Financial Institutions (Carrying Amount) $21,577 � $21,577
Unamortized Financing Costs 264 264
Fair Value Adjustments 181 � 181
Total Value of Debenture and Loans from Financial Institutions (Principal Amount) 22,022 � 22,022
Other Debt & Capital Leases 27 27
Refinancing impact 0 � 26
Gross Debt Consolidated 22,049 22,075
Cash (486) � (486)
Net Debt Consolidated 21,563 � 21,589
�
�
Cablevision Operating Results
(Dollars in thousands)
� � �

Three Months Ended
September 30,

2018 �

2017 (13)

Actual Actual
Revenue:
Pay TV $783,252 $798,583
Broadband 457,709 416,972
Telephony 130,494 140,830
Business services and wholesale 242,305 230,200
Advertising 105,719 72,316
Other 2,209 2,458
Total revenue 1,721,688 1,661,359
Operating expenses:
Programming and other direct costs 585,117 570,995
Other operating expenses 403,445 401,981
Restructuring and other expense 14,122 35,364
Depreciation and amortization 378,549 656,122
Operating income (loss) $340,455 $(3,103)
�
Suddenlink Operating Results
(Dollars in thousands)
� � �

Three Months Ended
September 30,

2018 �

2017 (13)

Actual Actual
Revenue:
Pay TV $271,415 $271,363
Broadband 272,198 241,306
Telephony 30,857 31,649
Business services and wholesale 101,888 94,442
Advertising 18,107 17,456
Other 2,408 5,426
Total revenue 696,873 661,642
Operating expenses:
Programming and other direct costs 206,120 184,283
Other operating expenses 165,681 168,433
Restructuring and other expense 2,465 18,084
Depreciation and amortization 157,504 167,164
Operating income $165,103 $123,678
�

About Altice USA

Altice USA (NYSE: ATUS) is one of the largest broadband communications and video services providers in the United States, delivering broadband, pay television, telephony services, proprietary content and advertising services to approximately 4.9 million Residential and Business customers across 21 states through its Optimum and Suddenlink brands.

_________________________

(1) � � � See “Reconciliation of Net income (loss) to Adjusted EBITDA and Adjusted EBITDA less Cash Capital Expenditures” on page 9 of this release. Operating Free Cash Flow (“OpFCF”) defined here as Adjusted EBITDA less cash capital expenditures.
(2) Free Cash Flow defined here as cash flow from operating activities less cash capital expenditures (including deductions of cash interest, cash taxes and net changes in working capital).
(3) Including $1.5 billion one-time special cash dividend (paid in June 2018) and up to $500 million of share repurchases.

(4)

Based on Sprint analysis of Speedtest Intelligence data average download speeds for Sprint Long Island market from July 2017 to July 2018 for All Mobile Results

(5)

Excluding leases / other debt.

(6)

Amounts for 2017 have been adjusted following required GAAP accounting standard changes to reflect the adoption of ASC 606, Revenue from Contracts with Customers, and ASU No. 2017-07 Compensation Retirement Benefits (Topic 715)

(7)

Amounts for 2017 have been adjusted following required GAAP accounting standard changes to reflect the adoption of ASC 606, Revenue from Contracts with Customers, and ASU No. 2017-07 Compensation Retirement Benefits (Topic 715).

(8)

Amounts for 2017 have been adjusted following required GAAP accounting standard changes to reflect the adoption of ASC 606, Revenue from Contracts with Customers, and ASU No. 2017-07 Compensation Retirement Benefits (Topic 715).

(9)

Homes passed represents the estimated number of single residence homes, apartments and condominium units passed by the cable distribution network in areas serviceable without further extending the transmission lines. In addition, it includes commercial establishments that have connected to our cable distribution network. For Cequel, broadband services were not available to approximately 100 homes passed and telephony services were not available to approximately 500 homes passed.

(10)

Customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one customer, regardless of size, revenue generated, or number of boxes, units, or outlets. In calculating the number of customers, we count all customers other than inactive/disconnected customers. Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group. Most of these accounts are also not entirely free, as they typically generate revenue through pay-per-view or other pay services and certain equipment fees. Free status is not granted to regular customers as a promotion. In counting bulk Residential customers, such as an apartment building, we count each subscribing family unit within the building as one customer, but do not count the master account for the entire building as a customer. We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel.

(11)

ARPU calculated by dividing the average monthly revenue for the respective quarter or annual periods derived from the sale of broadband, pay television and telephony services to Residential customers for the respective quarter by the average number of total Residential customers for the same period. Historical ARPU figures have been adjusted to reflect the adoption of the accounting standard change ASC 606, Revenue from Contracts with Customers.

(12)

Excludes management fees

(13)

Amounts for 2017 have been adjusted following required GAAP accounting standard changes to reflect the adoption of ASC 606, Revenue from Contracts with Customers, and ASU No. 2017-07 Compensation Retirement Benefits (Topic 715)
�

Altice USA

Head of Investor Relations

Nick Brown, +1 917-589-9983

[email protected]

or

Head of Communications

Lisa Anselmo, +1 929-418-4362

[email protected]

Source: Altice USA

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