Suddenlink Shows Solid Q3

Cash Flow Up 13%, Revs Rise 4%
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In what could very well be its last earnings conference call before it closes its $9.1 billion deal with European telecom company Altice, Suddenlink reported strong third quarter results, boosting cash flow by double digits and revenue by nearly 4%.

Suddenlink agreed to be acquired by Altice in May in a deal valued at about $9.1 billion. The transaction is expected to close sometime in the fourth quarter. After the deal closes, Suddenlink founder, chairman and CEO Jerry Kent will exit the company.

Kent chose a good note to leave on. While basic subscriber losses were heavier than in the same period last year – 8,500 compared to a gain of 2,400 in 2014 – the 2014 period was Suddenlink’s best third quarter subscriber performance in about seven years.

Financially, Suddenlink was humming on all cylinders. Cash flow increased 13.1% to $245.6 million – after the impact on non-recurring expenses the increase would have been 17.1% -- and revenue rose 3.6% to $605.1 million.    

Suddenlink also added 21,600 high-speed data customers, which helped boost overall customer relationship growth in the period to about 23,000.

Helping the drive the cash flow growth were dramatically reduced programming expenses. Suddenlink dropped Viacom’s networks about a year ago and while company didn’t specifically how much expenses were reduced, only that they decreased for the period. It also wouldn’t identify Viacom by name, referring to them only as a “major programmer” that was removed from the lineup.

In response to a question about data usage caps, Kent said that data overage fees have grown at the company, but he didn’t see them as becoming a significant portion of revenue, mainly because they could discourage customers from using the service.

The Suddenlink chief also had some insight into some recent moves by telcos to push a quadruple play of voice, video, data and wireless. While AT&T has been most aggressive – and it overlaps about 8% of Suddenlink’s markets with its U-Verse service – Kent didn’t see it as a threat.

“I don’t think it’s a near term issue, but I suspect in the longer term the quadruple play will definitely be something offered by the real large operators in this space,” Kent said.  

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