Altice USA Grapples with Escalating Debt Amidst Operational Headwinds

Altice USA Faces Significant Debt and Operational Challenges

Altice USA (NYSE: ATUS) continues to contend with substantial debt and operational difficulties, leading to significant underperformance relative to the broader market. The company's financial health remains a primary concern for investors, exacerbated by ongoing broadband subscriber losses and projected revenue declines.

Second Quarter 2025 Performance Details

In the second quarter of 2025, Altice USA reported a net broadband subscriber loss of 35,000, an improvement from the 51,000 losses recorded in Q2 2024, but still indicative of ongoing customer attrition. Total revenue for Q2 2025 declined 4.2% year-over-year, reaching $2.15 billion and missing analyst estimates. GAAP earnings per share (EPS) fell to ($0.21), marking a reversal from the prior year's profit and missing analyst estimates by approximately $0.19. The company posted a net loss of $96.3 million in Q2 2025, compared to a net income of $15.4 million in the same quarter last year. Adjusted EBITDA for the quarter also declined 7.3% to $803.8 million.

Financially, Altice USA's consolidated net debt stands at $25 billion, contributing to a high net leverage ratio of 7.8x L2QA. The weighted average cost of debt (WACD) has risen to 6.9%. This debt load vastly exceeds the company's market capitalization of $1.12 billion, highlighting the severity of its financial position. Looking ahead, consensus estimates project Altice USA to experience revenue declines for fiscal years 2025–2027 and negative EPS for fiscal years 2025–2029.

Market Reaction and Analytical Insights

Altice USA shares have delivered a total return of -2% since February 2024, significantly underperforming the S&P 500's 31% return over the same period. This underperformance is largely attributable to the company's weak operating performance and persistent balance sheet headwinds. The substantial debt burden restricts the company's financial flexibility, hindering necessary network investments despite efforts to expand its fiber footprint and implement cost efficiencies.

To address its debt, Altice USA has engaged new advisors, Kirkland & Ellis and Evercore Inc., to explore potential transactions for debt reduction. However, market sentiment suggests that past refinancing efforts have merely provided temporary relief rather than a definitive solution. Management comments during the Q1 2024 earnings call, hinting at evaluating long-term capital structure options, heightened creditor concerns regarding potential balance sheet maneuvers.

Broader Context and Implications

Altice USA operates within an intensely competitive telecommunications landscape, facing significant pressure from fiber overbuilders and fixed wireless access (FWA) providers such as Verizon and T-Mobile. While the company is making strategic moves to expand its fiber network, adding 56,000 fiber customers in Q2 2025 and increasing fiber penetration to 22%, and targeting the lower end of the market with offerings like "FASTPASS," the high debt load limits its capacity for aggressive competition.

Furthermore, earlier speculation regarding a potential takeover by Charter Communications appears less likely following Charter's definitive agreement to acquire Cox Communications for $34.5 billion. This development removes a potential avenue for a significant capital infusion or restructuring for Altice USA.

Should Altice USA pursue a debt-for-equity swap to alleviate its debt burden, analysts anticipate that such a transaction would be highly dilutive to existing shareholders. Despite its weaker financial position and limited prospects for a turnaround or acquisition, the company currently trades at a premium to its peers, a point of concern for some analysts.

"We do not foresee ATUS organically improving its credit metrics before the 2027 maturity wall, and management hinted at LME as it considers options for its capital structure that 'supports long-term objectives,'" CreditSights noted in a recent report, underscoring the challenges ahead. Analysts also advise caution, suggesting Altice USA might undertake aggressive measures to capture discounts on its debt, similar to past actions in France.

Outlook and Key Factors to Monitor

The immediate outlook for Altice USA points to continued pressure on its stock price and potential for increased volatility as debt restructuring efforts unfold. Investors will be closely watching the effectiveness of the company's strategies to stem subscriber losses and grow its fiber customer base amidst intense competition. The trajectory of its substantial debt, specifically any proposed debt reduction plans and their impact on existing shareholders, will remain a critical factor in determining the company's long-term financial stability and market position. Future economic reports and policy decisions impacting the broader telecommunications sector will also influence Altice USA's operational environment.