Kyler Hasson helps me bag hold $ATUS

Episode Summary

Executive Summary: Andrew Walker and Kyler Hassan discuss why both are bullish on Altice USA (ATUS) despite weak recent stock performance. They compare Altice to Charter’s 2018 setup, debate whether weak broadband results signal business deterioration or normal volatility, and weigh risks around management credibility, pricing, customer service, mobile strategy, fiber overbuild, and leverage. The core bull case is that Altice remains cheap on EBITDA and EV/passing, can grow through fiber investment and buybacks, and could still deliver strong IRRs even with modest EBITDA growth.

Main Topics: Why Altice looks like Charter circa 2018 (Priority: 5/5): The hosts frame Altice as a cheap cable stock with a similar setup to Charter’s prior drawdown: hated sentiment, declining stock price, but a potentially strong long-term cash flow and buyback story. Broadband weakness and quarterly volatility (Priority: 5/5): They debate whether Altice’s zero broadband adds in Q2 reflect a structural problem or just normal variation in a smaller footprint business. Kyler argues one weak quarter is not enough to dismiss the thesis. Management credibility and strategic execution (Priority: 5/5): A major concern is whether Altice management has properly handled capital allocation and operating strategy, given the failed Atlantic Broadband/Kojico pursuit, aggressive buybacks near the top, and the misstep in mobile strategy. Pricing, customer service, and cost-cutting risk (Priority: 4/5): Altice is viewed as more aggressive than peers on pricing and cost reduction, which may have boosted short-term profitability but could raise churn and undermine long-term competitiveness if pushed too far. Fiber-to-the-home as the key defensive investment (Priority: 5/5): Altice’s strategy to overbuild fiber in its most competitive markets is presented as a potentially smart way to protect share, improve service costs, and future-proof the network, even if returns are lower than ideal. Cable sector durability and existential risks (Priority: 4/5): They discuss what could truly break the cable thesis industry-wide: 5G fixed wireless, regulatory price caps, or a more competitive broadband landscape. Both view these risks as real but not base case. Valuation, buybacks, and upside math (Priority: 5/5): The bull case rests on Altice’s low valuation, leverage-amplified equity returns, possible EBITDA growth, and the potential for meaningful upside if the stock rerates or if buybacks continue.

Key Arguments: Altice’s weak stock performance is driven mainly by broadband concerns, but one quarter of zero net adds is not enough to prove the business is broken. Altice is smaller than Charter or Comcast, so quarterly results are more volatile; normal noise can look alarming in a concentrated footprint. Management has made questionable calls—especially on mobile and capital allocation—but that does not necessarily mean the business lacks long-term value. The fiber-to-the-home build is the right strategic response in markets where Altice faces Verizon Fios and other overbuilders. Altice’s high price/cost strategy creates risk, but the current low valuation provides a cushion if the company eventually resets pricing or improves service. The most dangerous risk is sustained subscriber loss in the overbuilt Optimum footprint; if that is contained, the equity can work well. If Altice can grow EBITDA modestly and continue buybacks, even a flat valuation multiple could generate strong returns. 5G and satellite internet are not viewed as near-term cable killers because wired infrastructure remains faster, cheaper, and more reliable for most consumers. Regulatory price caps are a risk worth mentioning, but the speakers think they are unlikely and would likely take years to implement. On an EV-to-passing basis, Altice has become cheaper relative to Charter, which supports the relative-value bull case.

Data Points: Altice valuation: ~8.5x LTM EBITDA - Kyler and Andrew discuss Altice trading at a low EBITDA multiple as the core of the value thesis. Charter valuation reference: ~9x EBITDA in spring 2018 - Used as the main historical comparison for a hated cable-stock setup. Altice stock decline: Down 15%-20% since Q2 earnings - Andrew cites the selloff after Altice printed zero broadband adds. Broadband net adds: 0 in Q2 - A key catalyst for negative sentiment around Altice’s broadband growth. Altice broadband scale: Just over 9 million households passed - Used to explain why Altice’s quarterly broadband numbers can be more volatile than Charter’s. Suddenlink growth outlook: ~100,000 broadband subscribers a year over five years - Kyler’s rough estimate based on edge-outs and footprint dynamics. EBITDA per subscriber: Charter $610; Comcast $741; Altice $977 - Illustrates Altice’s more aggressive/high-price strategy and higher profitability per subscriber. Altice Optimum competitive footprint: ~3 million households - Estimated portion of the footprint competing with Verizon Fios and other overbuilders. Mobile margin: Comcast consolidated mobile EBITDA margin ~12% - Referenced to support the claim that cable mobile can become highly profitable over time. Altice PSU hurdle: $50 and $60 stock-price targets - Management equity incentive hurdles discussed as a potential sign of upside feasibility. IRR to $50: ~15% IRR from today to 2026 - Andrew suggests $50 by 2026 could be attainable under a modest growth scenario. IRR to $50 at current discussion: ~30% IRR over roughly 2.5 years - Frame for why the stock could be a strong performer if it rerates and/or grows EBITDA. Cabo valuation: ~20x EBITDA - Cable One is used as a comparison to show that cable equities can trade at very different multiples based on investor universe and perceived quality. 5G usage mix: ~90% of data goes over Wi‑Fi vs ~10% over wireless - Used to argue that home broadband remains the dominant path for heavy data use.

Pivotal Quotes: "What are we missing? Why is this down every day? What is the stock market seeing that you, me, and the bulls might be missing?" — Andrew Walker: He frames the central bear-case question on Altice after a sustained stock decline. "The only thing that really, the main thing that could really kill the equity from here is sort of sustained subscriber losses." — Kyler Hassan: Kyler summarizes the key risk he thinks matters most for Altice. "If you have a flat multiple and EBITDA grows a couple percent a year, your IRR is getting close to 20." — Kyler Hassan: He lays out the basic return math behind the bull case even without multiple expansion.

Implications: The discussion suggests Altice may be a classic leveraged cable contrarian: cheap, operationally messy, but potentially rewarding if subscriber losses stay contained and fiber investment stabilizes the footprint. The broader cable sector still looks resilient unless 5G or regulation meaningfully changes the economics.