Altice looking to avoid inventory risk for more profitability
Altice USA (ATUS), the fourth-largest cable company in the US, is all set to launch its own mobile service by next year on Sprint’s (S) network. Altice announced its MVNO (mobile virtual network operator) deal with Sprint in November last year. Altice is building on the trend started by Comcast (CMCSA) and Charter (CHTR), which have also launched their wireless services, both of which utilize Verizon’s (VZ) network.
Altice announced that it will provide the wireless service primarily based on the bring-your-own-device concept, according to LightReading citing Altice’s participation at the UBS 46th Annual Global Media and Communications Conference in New York. Thus, Altice will only provide the wireless service without providing the financing service for devices. Altice wants to avoid taking the “inventory risk” that goes with the “device-financing model.”
By reducing the inventory risk, Altice is looking to be more profitable. Its net profit margin was a mere 1.3% in the last quarter, while it was -16.8% for the first nine months of 2018. Its stock is down 8% in the last one year.