Good day. Thank you for standing by, and welcome to the Altice USA Q2 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Thank you. I would now like to hand the conference over to your speaker today, Mr.
Nick Brown. The floor is yours.
Thank you. Hello, everyone, and thanks for joining. In a moment, I'll hand you over to Altice USA's CEO, Dexter Goei and our CFO, Mike Grauer, who'll As today's presentation may contain forward looking statements, please read the disclaimer on Page 2. Dexter, please go ahead.
Hello, everyone. Before we jump into a summary of our second quarter results, Without which we couldn't and wouldn't have been able to navigate the pandemic as well as we have. Starting on Slide 3, we saw an acceleration in revenue growth 2nd quarter to 1.7% year over year with a particularly strong rebound in our leading advertising business. We continue to deliver high broadband revenue growth up about 8% year over year, although we have seen elevated move activity recently as consumers return to home locations as well as the protracted impact of several pandemic related regulatory programs and hurricanes. Despite the headwinds, we reported flat organic broadband customer growth in Q2 or plus 30,000 including our recent Moores broadband acquisition.
We remain confident in faster customer growth going forward from our accelerated pace of footprint expansion, sudden new cable network upgrades and optimum fiber upgrades. We also continue to invest in innovative new products more seriously our offscreen device, which I'll come back to shortly. Turning back to financials, adjusted EBITDA was flat year over year even with some tougher comparisons which Mike will touch on later. We delivered another strong quarter of free cash flow at $406,000,000 and just under $1,000,000,000 for the first half of the year alone. This has supported $626,000,000 of share repurchased year to date or just under half of our full year target, all of which gives us the confidence to reiterate our 2021 financial outlook.
Looking at Q2 revenue growth in more detail on Slide We continue to see an acceleration from the Q1 growing at 1.7%. Residential revenue was flat year supported by more reopening activity. Finally, news and advertising grew very strongly up 36.4% with a much easier year over year comparison. Turning to Slide 5, focusing our residential business. We reported an organic net loss of 12,000 residential customer relationships excluding Morris Broadband's acquisition, which definitely added 35,000 unique customers since the process acquisition in the quarter.
To provide some context, the second It's usually seasonally weaker for us. But as I flagged earlier, we did see a noticeable pickup in new churn as markets are realty more widely. This includes customers leaving our suburban footprint around New York and going back to New York City, which remember is outside of our bench footprint. For illustration, if move churn was more in line with the Q2 of 2019, we estimate we actually would have been flat in terms of customer relationships and would have reported 14,000 broadband net additions rather than post the year. Additionally in the quarter, we disconnected about 7 for those affected by prior hurricanes in Louisiana.
In other words, without the impact of elevated move churn and pandemic programs and storms, We would have been at +21,000 data net adds and plus 7,000 customer relationships for the quarter. Recall that New York was the latest state to prevent us from disconnecting customers with legislation enacted in May this year. While this new year quarter was lifted at the end of June, coincidentally at the end of the declared COVID-nineteen state of emergency, It has led to some customer revenue disruptions, which will carry over into the Q3. We've not finally been able to resume our normal disconnect policies across the whole And so our trend should normalize by the Q4. However, if elevated move churn persists as we continue to see it recently, It may be difficult to match historical 2018 2019 organic broadband customer growth for this year.
Again, to backdrop our strategy remains the same, which is to achieve faster broadband customer revenue growth by accelerating the pace of new builds and network upgrades including our Saga rollout. We are expanding our footprint and we'll be delivering services which are consistently better than those offered by our competition which sets us really well for the next few years. On Slide 6, we would like to provide an update on some data usage trends. Average monthly data usage per customer was 4.45 gigabits per month in Q2 with broadband only customers using closer to 600 gig per month. VideoStudio remains the biggest driver accounting for about 2 thirds of data usage and this is also helping drive demand for higher broadband speeds.
Remember, over 50% of our customer base still only takes 200 megabits per second or lower, so we still have a lot of room for growth here. 42% of our gross additions are taking 1 gig broadband speeds in areas where it is available. We've been very optimistic about the 1 gig and multi gig opportunities ahead of us. Slide 7 shows us how much success we're having right now in continuing to upsell customers to higher broadband suite tiers. Our 1 gig customer penetration increased to 11.3% in Q2, up from just 3.7% a year ago.
Our average download speeds have nearly doubled in the past 3 years of 3 16 megabits. And as you can see, that this is accelerating as customers are increasingly Turning to Slide 8, we want to update you on our long term network expansion and fiber strategy. On the left, you can see we are on track for at least 150,000 new homes built, mostly edging out around the 70 different with more programs inorganically adding another 90,000 homes passed in North Carolina. This is an acceleration of our prior run rate of newbuilds. We are still achieving about 40% after the 1st year of expanding our outdoor network into new areas.
So we're getting a very good return on this investment. Separately, we are continuing to upgrade existing homes in the Southern footprint in areas where customers previously only received a maximum of 150 megabits per second, taking us up to either 400 megabit or 1 gig. On the right to continue in Q2, we reached about 1,100,000 fiber homes passed ready for service. We are still on track to pass 500,000 homes this year with a material pickup right now in the summer months. Our penetration of fiber packing is now up to 4.3% compared to just 1% in Q2 2020.
About 2 thirds of our fiber growth sites are taking our symmetric 1 gig product, which is our best service available today. So we are focused on making multi gig speeds available as soon as possible and should start marketing fiber more actively in the next few quarters. Moving to Slide 9. Last week, we announced our latest product, off stream streaming and steady stream. This is a new 4 ks streaming device powered by Android TV operating system.
Customers will have access to a wide range of content including over 50 streaming TV channels and all the most popular streaming apps pre installed with thousands more available in the Google Play Store. The new stream device is available for free to broadband only customers who take our 1 gig service or the highest broadband speed available in the service area and is available to other broadband only customers for just $5 per month. We believe this offer a really good alternative for our broadband customers that don't want to take a legacy cable TV bundle. Last week, we also announced the rebrand of Altice Mobile as Optimum Mobile, which is the first step in our plan to align all of our connectivity brands including SunLink Adventures under 1 national opt in brand. Recall, we recently migrated all of our active mobile customers to 2 mobile's network.
And as we're seeing a much better customer service, This is a great time to rebrand and align the business more closely with our fixed broadband business. Optimum Mobile had approximately 180,000 mobile As of the end of June, reaching 3.8 percent penetration of LTCSA's residential customer base with revenue in Q2 up 4%. On Slide 10, on Business Services, I'm pleased to say revenue trends continue to recover across our SMB and Lifecost businesses as customer growth has been much better in recent months. In fact, Q2 saw our best ever SMB customer net adds in 4 years. Business reopening activity has been accelerating as vaccination rates increase and operational restrictions relax.
Restaurants, theaters, health bus, Travel and tourism are examples of businesses and industries that start to reopen and arriving in Q2. The swing back around the New York Tri State area is more dramatic because the We still see a higher than normal retail and commercial office based vacancy rate, which means many businesses are still missing, but the situation is improving. As K-twelve and college kids safely go back to school, we believe The next big step up for the economy in our B2B business. During the quarter, Lifetouch also announced expansion of its network into Boston Through 3 acquisitions and to clean new organic fiber build. We strengthened SIPOC presence across Tier 1 markets in the Northeast and we're making investments in growing the sales team to drive penetration.
Focusing on our news and advertising business on Slide 11, we saw very strong growth this quarter, up 36%. As a reminder, Q2 last year saw the biggest negative impact from the pandemic on our advertising business. Local, regional and national advertising markets are all recovering, which we expect to continue. And we saw additional growth in the recent New York narrow and New Jersey's gubernatorial election races. We still expect revenue for the whole of 2021 will be flattish on a year over year basis though as we will have a tougher comp in the second half due to the political comp.
And now I'll hand you over to Mike to go over the financials in more detail.
Thank you, Dexter, and good afternoon, everyone. Thank you for joining us today. Picking it up on Slide 12, You can see our adjusted EBITDA margin was 43.9% in the 2nd quarter, which is in line with 2019 levels, With total EBITDA growth flat year over year. Excluding mobile EBITDA losses, our Q2 EBITDA margin was 44.8%. In looking at year over year variances, recall that we had some temporary savings in the Q2 of last year, about $30,000,000 in total, including store closures and lower sales and marketing expenses.
Our EBITDA led CapEx or operating free cash flow margin of 31.1% was also in line with 2019 levels as we ramp back up on the pace of our fiber rollout and new builds. You can see this again on Slide 13, as our capital intensity was 12.8% this quarter, almost exactly in line with 2019 levels. Without growth investments in fiber and new home builds, capital intensity would have been under 10%. As we flagged previously, our CapEx spend is increasing back up to historical levels now as we're back on track with our network expansion and Without as many delays on the fiber permitting side in particular. As Dexter outlined, we remain excited about the long term potential of our network to keep delivering superior connectivity solutions to our customers at a reasonable cost, driving sustainable volume based organic growth.
Slide 14 highlights another strong quarter of free cash flow generation at $406,000,000 which means we've achieved free cash flow of $943,000,000 year to date. I would highlight that cash taxes have started to step now with a net outflow of $97,000,000 in the 2nd quarter. We still expect total cash taxes of about $300,000,000 to $350,000,000 for the year. We also saw cash outflow for the Morris Broadband and LightPath transactions closing in the quarter and our cash flows from financing activities included an outflow of $222,000,000 related to our share repurchase program. Moving to Slide 15, we show Following our recent refinancing activities, the weighted average life of our debt was extended to 6.6 years and our available liquidity was boosted to over $2,300,000,000 even after our recent acquisitions.
Our weighted average cost of debt remains at 4.7%. Specifically, recall that in May, we issued $1,350,000,000 of new 10.5 year, 4.5 percent senior guaranteed notes and $500,000,000 of new 10.5 year 5 percent senior notes to refinance the existing 5.5 percent senior guaranteed notes due 2026 and repay a portion of the drawn revolving credit facility. We have no annual bond maturities greater than $1,000,000,000 before 2025, all of which could be covered by either free cash flow generation or capacity from our revolver. We will continue to proactively and opportunistically manage our liabilities in the same way as we've done in the past and still see plenty of additional refinancing opportunities. For example, we have a non callable 6.75 percent bond maturing in November this year.
So that's probably the next thing for us to address in 2021. Lastly, on Slide 16, we provide a reminder of our financial outlook for 2021, which we are reiterating today. We expect to grow both revenue and adjusted EBITDA for the full year, reducing leverage to under 5.3x. We are at a peak in leverage right now given our recent acquisitions and as our EBITDA is normally weighted more to the second half of the year. Our medium term leverage target remains unchanged at between 4.5x and 5x.
We expect cash CapEx in a range of $1,300,000,000 to $1,400,000,000 as we ramp up our fiber rollout and new builds, driving higher capital expenditures in the second half of the And finally, we are still targeting $1,500,000,000 in share repurchases this year, having completed just under half of this amount at 726,000,000 year to date. Lastly, before I finish, I also just want to take a moment to thank our team at Altice USA for all their dedication and commitment emphasize how focused we are on executing on all of our growth initiatives. And with that, we will now take any questions.
You have your first question coming from the line of Philip Cusick from JPMorgan. Your line is now open.
Hey, guys. Thanks. First, I guess, for Mike, can you help us think About EBITDA in the back half, you talked about a tough OpEx comp in the second quarter. Growing From the Q2 level, the 3Q, 4Q seems difficult. I'm curious why that happened.
And then second, Dexter, as you think about the consumer broadband growth expectation change, what's changed specifically that you now think it's
So to talk about The second half EBITDA, Bill, based on our own internal projections, different programs we have in place, as well as some of the comps, at least on the OpEx side, Get a little easier as some of those temporary cost savings reverted back into our cost base in the second half. We're pretty confident we can grow EBITDA in a manner that's implied by the guidance we've given and you can do the math and figure out exactly what's implied by that. So we're pretty confident that we're going to be able to hit those targets, which is why we're reiterating that guidance.
Yes. Phil, I think, Kristen, on we flagged this on the last call I think we flagged this with some of our shareholders is this we've seen a reversal obviously with And we've seen some impact regarding regulatory. And if you see the footnote on Slide 5, We've got about 10,700 subscribers between New York at 7,000 and some storm related Number is about $3,700,000 that are going to affect coming into the Q3. And if we take kind of our historical save rates in terms of undisconnected Clients that have been balance forgiven and then effectively Going forward, we're about 2 thirds. So we've got about 4,000 ish numbers of storm related and regulatory related Customers, but the biggest issue is really elevated levels of move churn.
And as we flagged in some of the commentary, we've seen about $14,000 incremental move turn In the Q2 of this year relative to the Q2 of 2019. And so we're being cautious here. If move churn continues to persist We've seen elevated levels of move churn in July. Then the numbers that we expected to hit For the year, which were historical 2018 2019 numbers, we may come in light on that. But we have to really see If those elevated levels of churn continue.
Just to refresh the memory, I think in 2018 2019, we had about 72,000 Broadbanded adds for each of those years. Last year in 2020, we did 142,000 I've brought into that, right. So, all this for the business is growing on a cumulative basis 2021 versus 2018 2019, but maybe not at the rates of 2018 2019 on individual years if elevated move churn continues.
Dexter, on that move churn, the housing market is really strong. I would think anybody moves out of a home, Someone else is moving back into that. Are you finding that you're losing share on churn now? Are you a Net share loser on customers who turn over, whether it's yours or someone else?
Well, I think that would be a relevant Comment necessarily for us if we had a much bigger footprint, right? But as you know, just in the New York Tri State area, We benefited from quite a bit of people leaving the city to go into the outskirts of the city And that move churn is reversing effectively the other way. And so people are not necessarily At full capacity penetration, replacing the empty homes in Long Island or Connecticut or New Jersey that are coming back into the city. So we have not It's not a share issue. We're just in our footprint and in the Southern footprint, particularly also, as you know, you move down to the next time over, that may not be our footprint.
So there's some rearranging. Again, on a cumulative basis, if you take 72 plus 72 in 2018 to 2019, it's 144. We had 142 in 2020. We're going to materially beat the average of 2018 2019 to your point about Housing activity, but I do think we're going to see some reversal or have seen some reversal in some of those gains that we did last year, which are just going To bring down most likely the 2018 2019 absolute numbers relative to 2021.
Got it. Okay. Thanks guys.
Your next question comes from the line of Doug Mitchelson from Credit Please, your line is now open.
Thanks so much. Dexter, I
just wanted to continue on the broadband path. Anything you're seeing In terms of changes in level of competition or promotions, any shifts by you and your go to market strategy or your marketing efforts Some broadband that we should be thinking about. And then sort of separately with what's going on in the marketplace today, when you think about your big three initiatives To drive broadband growth going forward, can you give us a sense of when we should see those really kick in for each? I appreciate the update you're giving in terms of how many homes passed and Homes upgraded and fiber homes built, when do those really kick in in terms of driving incremental subscriber growth relative to the company's historical case? Thank you.
Yes, that's a great question. Listen, on competition, we're not seeing elevated levels of competition across the board. People focus very much on the Fios numbers. Last year in 2020, in Q2, about 23% of our gross ad activity happened in the Fios footprint. This quarter 2021, 22% of our Activity is happening in the fast footprint, right?
So we're not seeing major differences in terms of competitive environment, which is being driven by some of the larger competitors. It is true that with the Lower activities around non paid disconnects that we've seen in the first half, and I think that's we've seen that across our peers as well. There is less Gross ad activity in general, as people are not disconnecting on a non pay basis and reconnecting with someone else, right? So gross ads in general, I think are down. But in terms of where our activity is, we're still seeing the same amount of activity In such things as the files footprint versus historical numbers.
In terms of overbuild, we're not seeing any elevated levels of over Either particularly in the subling footprint today. So I think it's pretty much business As usual, if we put aside what's happening in new churn and on the regulatory and storm front, which In terms of our CapEx initiatives, the big summer months are now, which is Where most of the build activity occurs. So really mostly back end, it's going to the Q4, which really sets us up for 2022. I think we've signaled going into this year that 2022 and onwards We expect to see much more elevated levels of broadband net adds. So we're going to do about 250,000 or 300,000 upgrades in Suddenlink that will get delivered this year.
Most of them are going to get delivered at the back end of the Q3 going to the Q4. We've got 500,000 FTTH homes this year and that number will increase going to 2022. And we're on track to deliver 150,000 Edge Out new homes build this year. But again, a lot of those are coming online at the end of the Q3 going to the Q4. So our penetration Numbers of, let's call it, 40% in the first year that we see from Edge Out new homes build, that's really going to benefit
Your next question comes from the line of Rafe Feldman from Goldman Sachs. Your line is now open.
Thanks. I'm going to stick with the CapEx team, if you don't mind. Now that you're sort of getting back on pace with the fiber deployment, I imagine All of that or virtually all of that would be in optimum regions where you're competing with Fios. And so the first question would be, at what point would you expect You would have substantially upgraded the Fios footprint to be fiber on your end. And then when you get to that point, What do you expect to do then?
Do you see merit in continuing with the fiber rollout across other portions of the footprint Because there are certain cost savings and if you're not going to do that, what would be very high on the CapEx or the capital allocation prioritization list at that point in time?
And then just a quick question on
the Edge Outs. How much of that is building your network where new homes are being built versus expanding into areas where you previously didn't And why is now the right time
to do that? Thank you.
Sure, Brett. Listen, on specifically on the fiber footprint, we expect To be built out over the next 2 years. So by the end of 2023, I think we would have covered the 3,000,000 homes passed Where we compete with Vios. Thereafter, we absolutely look to do more. There are areas that we were that are going to be prohibitively expensive.
So it's not necessarily only in the optimum footprint, but A lot of our Edge Out, new home build are either going to be done in fiber to the home Or we're going to be doing it in quasi fiber to the home in our FOG effectively basis. And so we're going to continue to deploy fiber to the home actively across our footprint. But obviously, after we finish and end of 20 And 3, the big bulk of our fiber outlay will have been done. And then we'll have to look at selectively Attractive ROI situations to your point about cost savings or longer term effects in terms of revenue effects Going forward and make those choices 1 by 1. What else do you ask In terms of edge outs, most of it is in terms of new home build areas.
And then there are adjacent markets that are either DSL only or run by smaller mom and pop Local operators where they do not have the advantage of either a very high performing network Or in terms of attractive bundled services that we have. And so Most of our new home build activity today remains new areas, new homes built, particularly in the Texoma area. But we do see certain areas where we are overbuilding just purely some smaller operators where we think
Next question is from John Hodulik from UBS. Your line is now open.
Great, thanks. Thanks for just final clarification on the high speed data side. Do you guys think that given the trends you're seeing, let's start through the quarter that you can grow High speed data adds in the 3rd Q4. And then my second question is on the mobile strategy, actually rebranding in the Optimum footprint, any expectations for maybe being a bit more aggressive? That's all the 5,000 that this quarter, but What do you see as the opportunity there on the wireless side?
And should we expect any sort of changes to the current strategy? Yes, I think the answer on the first one where on a reported basis we're at 12,000 year to date Through the first half of data net adds, we absolutely expect to be data net add positive both in the 3rd Q4. In terms of mobile strategy, really this was based on the fact that we finally have migrated everything onto the T Mobile network, That our churn rates have gone almost virtually halved in the 1st 6 months of this year. And assuming everything We absolutely want to get a lot more aggressive here on the marketing strategy going forward. So probably more around a back School type of event as a lot of promotions and marketing activity happens.
Through to the end of the year, we'll be looking at being more aggressive on the mobile side.
Thanks. Next question is from James Ratliff. Please also State, your company name, your line is now open.
Thank you. It's Evercore, I ask. 2, if I could. First of all, regarding churn, How are you doing in non move churns, so voluntary customers switching to other providers? Have you seen a shift in terms of, The net flows on that front.
And secondly, with the goal of 4.5 to 5 turns of leverage, what's the mix to get there in terms of EBITDA growth versus reduction in absolute net debt over time? Thanks.
I think on churn, non paid disconnects have obviously Done a lot better than historical levels, which makes a lot of sense given the trends coming out of the pandemic. And voluntary churn has been pretty stable across the footprint, right? Pockets here and there where you do see aggressive But overall, we're seeing voluntary churn stable, but the nonpaid disconnect churn Improvements are not outweighing the move churn numbers that we're seeing. In terms of leverage, And listen, I think we look at this in lots of different ways. Obviously, the share buyback strategy is really Going to be very much dependent on cost of capital and where the stock is trading in those types of I don't think that or not we have M and A opportunities, but it should be a mixture of free cash flow
Next question is from Ben Swinburne from Morgan Stanley. Your line is now open.
Thanks. Good afternoon. Two questions. First on Altice Stream, Dexter, OptumStream and SuddenlinkStream. Just maybe you could talk a little bit more about that strategy and sort of product plan.
It's interesting you guys I know you have a lot of Apps on the Altice One box, so why did it make sense to sort of go with the streaming stick approach? And are you have you considered a broader marketing push beyond the 1 gig service? It's a product that's probably not too expensive For you guys, especially wholesale, I'm just curious if you think about using that as a more aggressive marketing or bundling Approach than what you've done so far. And then I just wanted I was curious, I don't think anyone's asked about EBB. There were some comments earlier in the quarter that that was not a major driver of net adds in the quarter.
I was just curious now that we have the quarter in the books if you had any comment on the Size or benefit from EBB on the net adds? Thanks.
Sure. On the stream side, Ben, Listen, the strategy is pretty simple, right? I think the Altice One experience is a great experience for those heavy users of large bundles. But the CapEx associated with that product is significant. And with the attachment rates Continuing to fall on the bundled product where we're kind of in the high 50s, low 60s 2, 3 years ago, and we're kind of in the 30% to 35% levels today in terms of video attachment rates.
There is a desire for our 1P broadband subscribers to have a video product alternative That's very cheap and cheerful, right? So when you're getting your Stream Box for free and you're 1 piece subscriber, That's an attractive product for a lot of people who are mainly OTT based. And to the extent that they ever want to get a bundle package on an OTT basis, They can do it also over the Stream product. So it's really a CapEx play being reactive also to what our consumers want and how our consumers are behaving today with most of their activity on the video side being LTT based. And if you really look at what we spend and how easy to deploy Stream Box versus Altice 1 Box, It's a no brainer.
So there's boxes for 1 type of subscriber and then boxes for other types of subscribers that we think is going to help stickiness with our customers. On the 1 gig product, Absolutely, we expect to go to multi gig, as we've spoken about, relating to our FTTH product. Are we going to be more aggressive on bundles and marketing? Yes, I would assume so As we go into 2022 and launch multi gig products, have we started to signal what we're going to do? Not yet.
But we have put in our orders for multi gig modems up to 10 gig. And so that will be a product that we're On the EBB front, this is a small number of Scribers, I think we had about 29,000 applications year to date. And we've had about approvals of about 6,500 approvals. But of those 6,500 approvals, Only about 300, 400 are new customers. The rest are existing customers who have benefited from the subsidy.
Got it. And that's probably too small to impact ARPU, I'd assume, right?
Yes, absolutely tiny. Exactly.
Yes. Okay. Thank you.
Next question is from Khotgan Morel from RBC Capital Markets. Your line is now open.
Great. Thanks for taking the questions. A few on fiber, if I could. It's great to see the accelerating momentum with the build and penetration. You touched on this a bit in a prior answer, but I was hoping for a bit more color specifically with fiber in terms of the timing of the benefits you Would you expect to see a discernible impact to your consolidated results exiting this year into 2022?
Or should we think about it more of a 2023 beyond event. And just lastly, I know you're not guiding to 2024 or 2025 today, but as you move beyond the big bulk Of the fiber outlays in 2023, should we expect the, call it, dollars 300,000,000 to $400,000,000 of annual fiber CapEx to roll off then? Thanks.
A lot of questions. Brian sits through some of them, which is Clearly, on the CapEx side, on fiber related CapEx, the big bulk of our fiber CapEx Going to be coming in 2022, 2023. And then we should See a reduction in our fiber spend CapEx in 2024 and onwards. In terms of Consolidated, let's call it more OpEx related since I answered the CapEx question, OpEx related benefits. The penetration levels are still quite small Right now, and so I think we had always flagged that probably somewhere maybe 2 to 3 quarters, 3 to 4 quarters from now, we'll get a better sample size.
But we have already seen satisfaction This rate has come down by about 30% on our fiber subscribers. We know that those numbers can improve from there Significantly, given our experiences in other geographies around the world. And so, we know that there's going to be a positive effect. I don't think I think the numbers are too small today for us to even to flag anything of meaning. But it's probably something more of a 2023 effect where you'll Hopefully some meaningful effects.
In addition to the fact that service related Visits as well as calls into the call center continue to reduce nicely. We saw that in 2020. That is continuing into 2021. And with the continued investment in network here and in products, We expect hopefully those numbers continue to fall. So there's a bunch of initiatives here that are affecting better service related OpEx numbers.
Thank you.
Next question is from Jonathan Chaplin from uSuite.
Thanks. Couple of quick ones. So we saw DISH get an incredible MVNO from AT and T decks. So I'm wondering if that is an opportunity for you Guys as well to improve on the MVNO that you've got with T Mobile at the moment by shopping it around. The alternative that I thought about in the past is finding some way to hop into the Comcast charter ramp.
It seems like theirs is pretty compelling As well. And relatedly, I'm wondering if you can give us a sense for what the fixed cost base In mobile is or kind of what's driving costs in that business at the moment? Should costs stay flat from here And you as you grow subscribers and revenues, you're growing against that cost? Or apart from your MVNO cost, is there other variable And then unrelatedly, there have been reports on uplink pressures in parts of your network. And I know some of your brethren are looking at an upgrade to 1.2 gigahertz with a high split.
Is that something you guys need to think about in portions of your network as well? Or is it obviated entirely By the fiber deployment, you can sort of get by with what you've got until you've got fiber everywhere. Thanks.
My questions. Just on MVNO, listen, yes, absolutely, we continue to always monitor what else is going out in the market. Timo has been a great partner, very constructive on a whole host of issues with us. And so we like our partnership. We think economics can improve and we continue to have discussions with them.
So I think we are aware of what's going on. We do get inbound calls from people on that, but we also are very, very happy here currently with Timo. On the cost base, there is Really, 2 variable factors. Obviously, one is the direct costs with our roaming charges and the second is marketing costs, right? So we're keen to bring this business to EBITDA breakeven to positivity by the end of next year.
We are as we have said, 70% of our Gross ads are now taking a per gig product, which is a very nice margin positive product. And only 30% of our base is taking unlimited. And today, about 80% of our base is unlimited and 20% is on a per gig basis. So Those numbers are going to flip as those numbers continue to flip in the right gross profit profile. All the incremental quarter over quarter, the numbers are getting better and the only variable cost is really a cost of marketing So as we see churn rates come down, customer service and metrics and onboarding experiences Get better and better, and we continue to deliver attractive margins for all of our new subscribers.
That's really going to do we put a push on marketing every now and then to drive volumes to accelerate on that pace? That's really the thing to look out for. On upload speeds, listen, we made some changes in certain of our footprint On upload speeds, those upload speeds, our new upload speeds that we're moving towards are on par or better than any of our peers at the same speeds. We just were a major outlier In terms of our current upload speeds, pre changes, the changes will really getting driven by Some heavy, heavy usages in by certain users who were, let's call it, hoarding A lot of the bandwidth. And so this is going to allow us to provide a much, much Uniformity and service across certain of our footprints there.
But to your point, this is really a short term I think particularly in the Optimum footprint relative to our fiber deployment Where many of the communities that have raised their hands on this announcement are going to get overbuilt with fiber over the next 12 to 24 months. So we have signaled that to the relative toy elements in various And so I think this is just a more of a PR And it is affecting any of our customers in terms of services that they're receiving. Got it. Thanks, Sachse.
Next question is from Craig Moffett from MoffettNathanson. Your line is now open.
Yes. Hi. Dexter, I wonder if you could just talk a little bit about broadband pricing. You talked about the competitive environment and Promotionality earlier, but it seems like your broadband prices are now somewhat higher than Verizon's. Can you just Talk about what experience you have when your prices are lower or Pricing to the competitive environment in individual geographic areas?
Yes. I mean, listen, I think, Craig, We monitor our broadband pricing very closely. We are consistently usually $5 to $10 cheaper when you add in all the fees and the modem correlated fees There. So that's really not where we're seeing pressure from Verizon. Where we do see pressure from Verizon is on their marketing campaigns where they start adding free OTT services aggressively, Adding on gift cards and adding on bundling discounts with wireless.
So the combination Of those three things, OTT freebies, gift cards and the bundling is where we see pressure, When you come in aggressively on those fronts, those are obviously starting to be on a combined basis a lot more attractive pricing relative to What we have, right? So there are lots of different things that we look at to counter that. But if you look just purely on video pricing today, they are $15 to $20 higher than ours. And They are redistributing those $15 to $20 of higher ARPU into more aggressive marketing campaigns on broadband.
So there are a lot
of things to look at in terms of what we can do, but that's really the driver. It's not really about pure 1P broadband pricing, we don't see pressures on a daily basis on just unique 1P pricing.
Is there how much flexibility do you think you'd have to price differentially in areas where you're up against Fios versus not. I would think sort of from a regulatory perspective, that's challenging sometimes.
I'm sorry, could I say that one more time?
Yes. How much flexibility do you feel like you have to price differentially in areas where you're up against Fios Versus where you're not. I think from a regulatory perspective, I can imagine that it might be somewhat challenging to have significantly different prices For different competitive markets?
Listen, I think we Review pricing for, let's call it, less competitive areas regularly as we do for competitive areas. We want uniformity in our pricing, particularly geographically in states and in regions, in contiguous regions. But sometimes we will have differential pricing depending where we are. And there are reasons for that, maybe Cost because of less dense areas, our cost of servicing those areas are a lot higher and those types of things. So there are a lot of factors come into our pricing strategy.
But clearly regulatory is a factor that we are aware of as well as just local environment and local competitive environment issues.
That's helpful. Thank you.
Next question is from Brian Graft from Deutsche Bank. Your line is now open.
Hi, good afternoon. I wanted to ask a couple of questions on the LightPath Advertising side, for LightPath, can you talk about the opportunity you see with the acquisitions that you've announced in the Boston area and also the expansion in Queens?
How should we think about
the impact on LightPath growth going forward from those things? And then, can you maybe just talk about your expectations for news and In the second half of the year, given tough political comps, but much easier core comps. Thanks.
Yes. Listen, on LightPath,
we've not That's a lot of money. I think you spent about $40,000,000 on various small business acquisitions Or I'm just buying some networks or some IRUs. And but I think this is an outsized opportunity for us to make over time meaningful moves into new markets and get outsized returns on very small investments. So These are the things we like that the new management team is putting in front of us. Clearly, if there are larger things for us to do, We will absolutely look to do that.
We think that we're right on the right path here to deliver much higher growth numbers I like that. It's going to take a little bit of time. These acquisitions are small. 2022, I'd be surprised if we saw a meaningful move in top line from new areas, but I suspect in 2023 onwards, we will do. So this is a good story to monitor.
The numbers are small today, but they could get bigger. So we like what the management team is doing. On news and advertising, we're cautious of trying To manage expectations to anything more than the 2020 new advertising numbers, Because we have a $60,000,000 political comp difference between 2020 2021. So if we could do as well as 2020 and slightly better, that would be great. That would be very, very good news.
And then we go back into the political cycle in 2022. So the things that John Steinberg and his team That have been great. They've been able to obviously, Q2 has been a big quarter relative to last year because Down a quarter relative to COVID, but we're growing our business across all of our divisions and making up for a big loss of political revenue this year. So expectations is for us To be revenue flat to hopefully slightly up.
Got it. Okay. Thank you very much.
Next question is from Andrew Dale from Arete Research. Your line is now open.
Hi. I just wanted to come back to your flat organic data net adds and the news churn and non pay disconnect commentary. I mean, I think Q2 normally has a drag from college seasonality in Southern Link. And obviously, you mentioned the 14,000 adverse News channel from the settlers back to New York City and the 7,000 extra non paid disconnects on regulatory storm. So I guess Which parts of your franchise are you seeing the offsetting positive net adds this quarter against these multiple drags?
And whether you can talk qualitatively about the optimum files overlap growth versus the non overlapped franchises and whether there's anything to Say about Southern Link Growth ex student seasonality or perhaps you've done something differently about the way those student contracts work?
No, listen, I think, Andrew, probably the disproportionate amount of increased move churn we're seeing is in the Optimum footprint. That shouldn't be a surprise there. So I think the settling footprint, as you rightly mentioned, Historically, Q2 does see very elevated levels of move churn because of all the college towns that we have there. But we are seeing most of the disproportion on the move turn affecting the Optimum footprint. So that's really the key item there.
Right. And the positive Offsetting the 0 net ounces is coming mainly where?
Well, I think we're seeing continued nice elevated Activity in growth coming from the Southern Link footprint, right? So the gross ad activity continues to build very well, which is why we feel good about or our EdgeOp strategy and our upgrade strategy at Suddenlink.
Okay. Thanks.
Your last question comes from the line of Michael Rollins from Citi. Your line is now open.
Thanks and good afternoon. I was looking at the disclosures around broadband consumption for the broadband only users. And it looks like it was down sequentially from last quarter at about 6 18 gigabytes to about 558. And I think on the year ago call, you may have referenced the number at about 5 50 gigabytes. And so I'm just curious If you could share some observations in terms of what might be impacting a sequential downtick in usage or the deceleration in growth year over year And what this might mean for the future direction, whether it's for the consumption of your customers or how this might or might not impact the type of speed tiers and spending levels that they subscribe to with Altice?
I mean, I don't think we have a real read as to 5% or 10% differentials Here other than the upward trend continuing to go in the right direction. I think there could be something to be said about People being less at home going forward and maybe kind of a back to An office type of levels, but the expectation is we're going to continue to see those usages Right. Now one of the things to remember is that as the attachment rates On video continued to fall, we're seeing a lot more 1P users, right? So the sample size is growing a lot Quicker than it has historically. And so those 1P usage, I would assume probably dragged down the meaning a lot more.
Thanks. You don't have any more questions. Presenters, you may end the call. Thank
Thanks very much.
Thank you. Bye.
This concludes today's conference call. Thank you all for participating. You may now disconnect.