Business context and reporting period
This is Altice USA, Inc.’s Form 10-K for the fiscal year ended December 31, 2021—not a standalone 2021 fourth-quarter report. The filing describes the Optimum and Suddenlink businesses, alongside Lightpath and other operations; Altice USA is the registrant and a holding company. Financial figures below are in U.S. dollars unless noted. The supplied company metadata says “Optimum Communications, Inc.,” which does not match the filing’s registrant name.
Altice USA provides broadband, video, telephony, mobile, business connectivity, news and advertising services across 21 states. At year-end it reported approximately 9.3 million network passings and 5.0 million fixed-line customer relationships.
Financial and operating results
| Metric | FY 2021 | FY 2020 | Change |
|---|---|---|---|
| Revenue | $10.091 billion | $9.895 billion | Up $196 million (2%) |
| Operating income | $2.525 billion | $2.115 billion | Up $409 million |
| Net income attributable to Altice USA stockholders | $990 million | $436 million | Up $554 million |
| Adjusted EBITDA (non-GAAP) | $4.427 billion | $4.415 billion | Up $12 million |
| Adjusted EBITDA margin | 43.9% | 44.6% | Down 0.7 percentage points |
| Cash from operating activities | $2.854 billion | $2.980 billion | Down $126 million |
| Capital expenditures, cash basis | $1.232 billion | $1.074 billion | Up $158 million |
| Free cash flow (non-GAAP) | $1.622 billion | $1.906 billion | Down $284 million |
Operating margin was approximately 25.0%, compared with 21.4% in 2020. Adjusted EBITDA and free cash flow are non-GAAP measures; the filing provides reconciliations and cautions that similar measures may not be comparable across companies.
Revenue mix highlights: residential broadband $3.925 billion, video $3.526 billion, telephony $405 million, business services and wholesale $1.586 billion, news and advertising $551 million, and mobile $84 million. Broadband revenue rose 6%; video fell 4% and telephony fell 14%. Residential broadband customers increased by 27,000, while video customers declined by 229,000 and telephony customers by 209,000. Overall fixed-line customer relationships declined by 9,900; reported ARPU fell from $140.09 to $137.79.
Year-end cash and cash equivalents were $196 million, down from $278 million. Total debt, including collateralized indebtedness, was approximately $26.5 billion; reported carrying-value debt excluding certain items was $24.8 billion. The CSC Holdings revolving facility had $1.436 billion undrawn and available, subject to covenant limitations, and $139 million reserved for letters of credit. The company reported compliance with applicable debt covenants. Total assets were $33.2 billion and stockholders’ deficiency was $871 million.
Material changes, outlook, risks and unusual items
- Revenue and operations: Broadband growth reflected higher recurring revenue per customer, rate and service-level changes, and customer additions. Video and telephony revenue declined mainly with subscriber losses. Business services revenue rose 9%, including approximately $100 million recognized in connection with an amended backhaul contract’s early termination.
- Profit and cash flow: Net income increased substantially, while Adjusted EBITDA was nearly flat and its margin narrowed. Lower depreciation and amortization and lower interest expense helped operating results; net income also reflected significant year-to-year changes in investment, derivative, and interest-rate-swap gains and losses. Cash generation weakened as capital spending increased and working-capital movements reduced operating cash flow.
- Capital allocation and financing: The company spent approximately $805 million on share repurchases in 2021. It issued $2.0 billion of notes in May and used proceeds principally to redeem $1.499 billion of 5.5% notes due 2026, with remaining proceeds used for general corporate purposes, including revolver repayment and repurchases. The company targets a CSC Holdings net leverage ratio of 4.5x–5.0x over time.
- Investment plans and management view: The company continues FTTH construction and HFC upgrades, with the aim of enabling multi-gig broadband, and is developing its mobile offering. Management stated that cash balances, operating cash flow and revolver availability were expected to fund the current plan, planned capital expenditures and debt service for the next 12 months. No specific revenue or earnings guidance is provided in the supplied filing text.
- Key risks: High leverage and refinancing needs; competition from fiber, wireless fixed broadband and streaming alternatives; continued video and telephony customer erosion; rising programming costs; supply-chain, labor and inflation pressures; COVID-19 impacts; cybersecurity and network disruption; and regulatory, franchise-renewal and privacy uncertainty. Three major New York franchises were expired at year-end, with operations continuing under temporary state-recognized authority; Lightpath’s New York City franchise renewal was also pending.
- Contingencies and governance: The settlement of IPO-related securities litigation remained subject to court approval. A shareholder derivative suit over equity awards and a Sprint patent-infringement lawsuit were also disclosed; management did not expect the matters discussed to materially affect financial position, though the Sprint matter could be material to results or cash flows in a period. The company is controlled by Patrick Drahi through Next Alt, which held approximately 95% of voting power as of February 11, 2022. KPMG issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Confirm the filing and security belong to the intended issuer: the 10-K is for Altice USA, Inc. (NYSE: ATUS), not an entity named Optimum Communications, Inc.
- Review the detailed debt maturity schedule, floating-rate exposure, revolver availability, covenants and the planned financing needed for capital expenditures and debt repayment.
- Assess whether broadband additions and FTTH build-out can offset ongoing video and telephony subscriber losses and the resulting ARPU and margin pressures.
- Separate recurring performance from the approximately $100 million backhaul-related revenue item and from volatile investment, derivative, tax and refinancing effects.
- Check progress and cost of network investment, supply-chain constraints, franchise renewals, and the resolution of disclosed litigation and regulatory matters.