I request everyone to just get seated. Welcome to the next session. For those that don't know me, I'm Vikash Harlalka. I'm the cable analyst at New Street Research. I am delighted to welcome Dennis Mathew, Chairman and CEO of Optimum. Dennis has been CEO for just around three and a half years, and he was handed over the incredibly difficult task of turning around Optimum. For the next 30 minutes, we hope that we hear how things are progressing in 2026. Dennis, thanks for being here.
Yeah, super excited to be with you all and talk about one of my favorite topics, the transformation at Optimum.
Right. Let's just dive into this. Can you talk about your priorities in 2026 and any guidance that you can provide on where 2026 will land?
Yeah. You know, this has been quite a journey, as you all have heard me talk about our transformation. You know, the first couple of years has been really about stabilizing the company, our operations, the quality, the way we, financial discipline, execution. We've done a lot of work in terms of rebuilding the culture and building an incredible leadership team. It's exciting to see that we're now being recognized for that progress. As we enter into 2026, we really want to start to go on the offensive. You know, we want to stabilize broadband, for example. To stabilize broadband in this highly competitive environment, we know that customers want quality and they want value.
For the first couple of years, we had to do a lot of hard work to deliver quality products, quality network, quality customer experience, and we see that that is translating. More work to do, but we've been able to really build an incredible team to make sure that we are heading in the right direction and rebuilding trust, rebuilding the trust with our customers. Now we need to lean into value, provide value for our customers, while also creating long-term value for all of our stakeholders. We'll talk a bit more about that, but we are going to be investing in our go-to-market strategy so that we can get back to stabilization of broadband and long-term growth.
As you all know, if you've been following us, our second priority is to do that in a financially disciplined fashion. You know, it's not a race to the bottom or, you know, growth at any cost. We have to do that in a disciplined fashion, and you've seen us do that over the last few years as we've gained command over ARPU, as we've gained command over OpEx, as we've gained command over our CapEx intensity. These are all things that, you know, it takes a lot of hard work, and we want to continue on that journey.
You know, this past year, as you all know, we had a very specific goal in terms of EBITDA and making sure that we had stopped the year-over-year declines and really drew a line in the sand for last year, and we're gonna continue to operate with financial discipline. Third, we wanna invest for long-term growth. You've seen our CapEx intensity moderate over the last couple of years because we were really focused on making sure that every dollar spent was driving a return and that we were doing our builds and our upgrades in a very disciplined fashion so that we were maximizing the deployment of that capital. We're gonna continue to invest. We're gonna continue to invest in our HFC plant. It's an incredible network, and we wanna invest in mid-split.
We wanna invest in growth in terms of multi-gig speeds across the footprint. We wanna invest in new build. You know, when I came, unfortunately, it was not happening in a disciplined fashion. It just wasn't. Now we've brought the teams together over this past year in particular so that we know when we're building, where we're building, why we're building, and we can monetize that build in a much more effective fashion. Then you've seen some of the growth, exciting growth happening in Lightpath. We expect capital, you know, to increase year-over-year because we're investing in long-term growth, and we're excited to do that in a fashion that provides return to the enterprise.
Got it. You launched new pricing earlier this month. Can you just talk about the rationale behind it and how it's working out?
Yeah. I'm excited to, you know, with our new pricing, we've been evolving our go-to-market, and we've been testing a whole bunch of different go-to-market strategies. As you all know, the competitive landscape is more intense than ever. As we think about the East, as I've mentioned in the past, you know, we've got 70% overbuilt with fiber, with fiber competition, and, you know, we've got fixed wireless across the board in the East and the West. In the West, we also have seen fiber overbuild increase to now 50%+. We think we do need to be highly competitive in this space, but at the same time, do it in a disciplined fashion. We've launched our new pricing across the footprint, across the entire geography, across every sales channel.
One, that just allows us to operate in a more simpler fashion, and it really helps us, as we think about, subscriber acquisition costs, just operate more efficiently. Then two, do that in a way that is highly competitive across the footprint, no matter what the competition is. At the same time, we want to drive mobile, drive our value-added services, drive attach of these new products so that we can ensure that we have proper command of ARPU. The exciting thing is that we're. You know, we're in the early days, and, the competition, remains intense. As I think about, you know, our subscriber performance, quarter- over- quarter, the competition is intense. You know, I see our performance to remain flat-ish, relative to Q4. That being said, we've been busy.
These last couple months, we've been busy implementing this new marketing strategy, this new sales strategy, really working hard in our retention with our retention teams to make sure that we can now operate at the highest level and get back to stabilizing broadband, but then have command of ARPU so that when folks are calling, we're now selling gig and multi-gig. We're selling in mobile. We're selling in video. We're selling in these new products so that we can really maximize volume and rate as we move forward.
Got it. What does all of that mean for 1Q subscriber trends? Any early results that you can share? I think I heard you say-
Yeah.
... flat versus 4Q.
I think it's gonna be. Yeah, the competition continues to be intense and so, you know, we'll be flattish to our Q4 results. But with these new strategies, you know, we're gonna be monitoring, you know, very specific metrics to see how they are translating into real results. We're looking at call volumes. We're looking at shoppers. We're looking at our ability to drive attach of mobile, to drive attach of these value-added services, to be able to sell in gig and multi-gig and ultimately, you know, get back to broadband stabilization and broadband growth. It's early days, but I'm optimistic that we have a strategy that we can execute against, just like we've done in the past across all the other products and services.
You know, we purposely, as we exited 2025, said, "We're gonna invest. We're gonna take some of these savings and invest so that we can compete at the highest level," but we are doing that in a way where we know we can see a return. We didn't wanna throw dollars after something and not know that we could provide a return for that investment and now with all of the work that we've done over the last couple of years in terms of laying a foundation, in our back office, in our systems, in the tools that we've provided to our teammates so that we can have command over acquisition pricing, ARPU erosion, and really go after broadband in a disciplined fashion.
Got it. Switching to fiber for a second, like, how is your fiber plan, fiber build plan progressing, and how do we think about, like, incremental passings for the next few years?
Yeah. I'm really excited about our fiber plan and the plant and how we just continue to evolve that strategy. You know, since I've joined, we've had to evolve that strategy a bit, and we've developed now a multi-year network plan, which didn't exist in the past. You know, when I think about our HFC network, we're gonna invest in gig and multi-gig speeds and really are on a path to continuing to drive those investments as we think about HFC. On the fiber side, we're leaning into fiber for all of our new build. 175,000+ new passings last year, the vast majority of which were fiber, both in the East and in the West. It's really exciting.
You know, four of the cities in our footprint are, you know, top 16 in terms of growth. A lot of new growth happening, and now we're doing it in a way that allows us to monetize that investment in a much more effective fashion. We'll continue to lean into that kind of investment for new build this year as well and continue to drive that in a fiber-rich manner as we move forward.
In 4Q, you slowed fiber migrations. Can you just talk about, like, the process behind it? What was the thinking, and when do you plan to re-accelerate fiber migrations again?
Yeah. We wanna lean into fiber migrations, but we wanna do that, again, in a financially disciplined fashion. The reality was that, when I first joined, it was ugly. It was a mess. It didn't even work. Like, it took, you know, five, six hours to even complete a migration. The first couple years, we had to work through all those technical issues, process issues, so that we could actually migrate folks. The video product didn't even work when we were migrating it. Now we've got the product. It works. The challenge is that, all of the migrations were happening in retention, and that was really impacting our ability to drive ARPU.
It was happening there because we just didn't have the robust base management plan, our base management infrastructure to be able to have a conversation with our customers, not at the point of retention. We should be doing that all the time. We should be having those conversations about new products, new services. It sounds so basic, but the reality is that we just didn't have the underlying systems. Now we have that infrastructure, and we want to build a strategy that allows us to migrate customers at the right point in time, that delivers great value for them, that gets them into the right experience, but doesn't erode ARPU. Like, there's no reason that our best product should be eroding ARPU, it should be generating ARPU.
We need to be doing that in a much more effective fashion, and we're on the path to doing that. The team is building the strategy, and I look forward to leaning back into fiber migrations towards the end of the year.
Got it. Just staying on that topic for a little bit, do you have any plans to decommission the coaxial plant?
We don't have those plans right now. You know, we have the HFC network is very robust, and we're excited about it. You know, as we continue to lean into fiber migrations, we're looking at how do we leverage that plant strategically as we move forward. There is no plans to decommission it per se, but we are evaluating how do we leverage that infrastructure and monetize it most effectively going forward.
Got it. Can you talk about the progress with your new video packages? In Q4 you had your best video result in a long time. Do we expect that to continue?
Yeah. I'm a, you know, it's incredible, right? The evolution of video and just how consumers are consuming video. You know, I look at my kids and I'm like, "Oh my God, this is like I don't even understand." They're all the user-generated content and all of that. As I came into the role, you know, everyone was still just operating like it was like 1995. You know, like, we can't have these conversations with our programming partners and ignore the elephant in the room. Like, we can't have these fat packages with all this content that people aren't watching and why are, you know, people don't wanna pay for that, and why are we forcing people to pay for content?
Like, let's put the customer in the center, and let's have a real conversation on what they value and what they don't value. Bundling in content that nobody watches with content that people do watch, we're just driving the customer crazy. We started to have these conversations about two years ago, and the good news is we've had many programming partners come alongside to help us build these new packages that resonate with customers. We have our entertainment package, our extra package, our everything package. Entertainment, you know, is just entertainment. You've got, you know, the Food Network, Discovery Channel. Like, you know, they. These customers get their news and sports. Maybe they don't even watch sports.
By the way, there's lots of places to get news, and so they're happy with that, and they just need a light video package that meets their family needs. There are some that say, "Hey, I need a little bit more. I need some broadcasts. I need some news and some sports." The extra package resonates with that customer demographic. There's some that, of course, some of us here, right? We just want everything. We just want it all. We love sports. We love all the entertainment. Just give us everything. These packages are helping us drive video at the point of sale, but then also provide great value to our existing base who are like, "Dennis, I'm going out of my mind. This is too much. It's too costly.
I can't deal with this." Then we're like, "Hey, how about this?" It's, "Okay, I don't need to drop completely," because they still enjoy that linear experience. You know, there's some customers that want a combination. Now we're able to provide them a linear experience in a cost, at a price point that resonates with them. Now we're also able to provide them some streaming services like Netflix, like Disney Plus, Hulu, you know, these other. That's the world that we're living in where, you know, we have to be able to provide the entertainment and video products that resonate, and we're continuing to see good momentum as we move into Q1, that packaging is resonating.
15% of our video base now is on these new packages, and I'm optimistic that we're gonna be able to continue to drive these packages at the point of sale and as part of our base management strategy.
Thank you for that.
Yeah.
Switching to wireless for a second, can you just talk about, like, how your wireless strategy is evolving in 2026 and how the trends are looking?
Yeah. I'm really excited about mobile. Only 8% of our base currently has mobile, and so this is a big opportunity for us. You know, when I came, we had to relaunch mobile and really, you know, make it a prominent part of our product portfolio because it's a great product. You know, we wanna be the connectivity provider of choice in the home and outside the home, and we have an incredible network in the home, and we have a great network outside of the home. What we've had to do is really, we've been on this journey to integrate it into our pricing, into our packaging, into our go-to-market, into our retail centers.
You know, when I came, we were on this path of building, you know, retail and I said, "Why are we building retail?" The reason was not clear. I said, "Well, let me clarify. We're building retail so that we can sell mobile, and we can have this incredible venue to talk about this product." This past year we had to focus, not just selling it, but selling it at a high quality. High quality. Now we have folks that are porting phone numbers. You know, almost 50% of the customers are porting their phone number. You know, over 35% are buying new devices and financing devices.
That allowed us to improve our churn profile by 700 basis points in Q4. As we go into this year, we wanna hit the accelerator, and so we have new everyday low pricing. You know, we are making it easier to buy new devices. We're evolving our credit strategy. You know, we had a legacy credit plan which made it really hard. I'm like, "Well, why aren't we selling more lines? Oh, we've made it impossible, that's why." Because that's why. We're not providing our great customers with the proper credit levels because people want new phones, right? I don't know why. We all want new phones. It's just a thing. It's like an addiction. You know, everybody wants a new. We gotta make it easy for them to buy new phones.
Again, this is all, like, the mom and apple pie type stuff, but we're making progress, and that progress is allowing us to continue to gain momentum, but not just sell for the sake of selling, but do it in a way that's high quality because we know that helps broadband. That provides a churn benefit. That maximizes customer lifetime value. We're excited about mobile. We're still in the very early innings, but I feel good that we now have it. We have participation across all of our sales channels, and we have quality participation where we're selling it in the right way, not only at the point of sale, but also into our base as we evolve our base management strategy.
Got it. You talked about focusing on quality of customers towards the end of last year, and you just mentioned that again. Should we expect an acceleration in customer net adds in 2026?
I expect us to get better every day, you know. We're on that journey. I believe that we've laid the foundation that will allow us to do that. We're focused on long-term value, and that's why we decided, hey, we wanted to pause, as I mentioned, last year so that we could do a better job of having our sales teams deliver quality sales in terms of porting phone numbers, driving device financing, and you know, we're on that journey, and we're making progress.
Got it. Turning to Lightpath, can you just give us any color on the hyperscaler contracts and just help frame the opportunity for us?
Yeah. I mean, this is an exciting area of growth. You know, we announced over the last couple of years over $360 million of wins in terms of hyperscaler opportunity that we've been able to close. You know, we've seen incredible growth year-over-year in terms of revenue, 35% growth year-over-year. The team is doing incredible work. You know, they're out there competing at a very high level. The pipeline remains robust, and the team is building the infrastructure, executing on the plan, you know, delivering great value, and so they're just competing at a very high level, and I'm very optimistic that they'll continue to do that. They've proven that they can execute.
You know, the team has proven we can build the infrastructure, we can execute, and so I'm excited for them to continue to drive that momentum as we move forward.
One of the questions we get, Dennis, is why issue ABS debt at Lightpath?
Mm-hmm.
Would you consider doing an ABS issuance at Optimum in the near future?
Yeah, we're looking at all options. I've mentioned in our in the past, you know, one of our priorities is also to ensure that we have a capital structure that allows us to deliver value for the long term. We do believe that a meaningful debt reduction is required for us and really rightsizing the balance sheet. Nothing to announce today, but we're continuing to evaluate all options and make sure that we can deliver maximum value for all of our stakeholders. We wanna compete at a high level, we wanna invest in growth, and we want to deliver value for all of our stakeholders.
We have the right team, we're on that journey, we're ready to keep going, and we are working actively to be able to have a capital structure that allows us to do that.
Would you consider selling your stake in Lightpath?
You know, we're always evaluating value accretive options but nothing to announce today.
Before we close, could you just give us an update on how you're managing your capital structure?
Yeah. This is, you know, as I was mentioning, you know, nothing to announce today, again, but we do believe that we need a meaningful reduction in our debt, and we need to have a partnership that allows us to have a capital structure that delivers long-term value for all of our stakeholders, and we're committed to that.
Any final words for our investors?
Yeah. What I would say is that, you know, it is a highly competitive environment, but we are controlling what we can control, and we have more command of the business. You know, it's been three and a half years of transformation, and I'm just incredibly proud of the progress the team has made to help us transform the way we operate, the way we deliver value to our customers, the way we manage our financial discipline, and we're committed to continuing to delivering maximum value for all of our stakeholders.
Dennis, thank you for a great discussion.
Great. Thank you. Thanks, everyone.