Investors who put their money on Altice USA (NYSE:ATUS) stock at this time last year can’t complain. The stock has gained 35% over the past 12 months. Also, Altice has returned nearly $2.0 billion to shareholders during this period. However, there are even more reasons to be optimistic about Altice in 2020.
Why did the stock fall?
Altice stock is trading at $29 per share—about the same as when the company reported its fourth-quarter earnings on February 12. The company generated revenue of $2.47 billion in the fourth quarter, which rose 0.8% year-over-year. However, the revenue missed the consensus estimate by about $30 million. The tepid revenue growth led to a 5.4% drop in Altice stock, which erased some of its year-to-date gains.
Altice has taken several steps to grow its business and deliver greater value for shareholders. Investors are starting to see the recent pullback in the stock as a buying opportunity. Altice stock has notched up several gains since the post-earnings sell-off.
Altice Mobile signed up 69,000 customers
As the traditional pay-TV market shrinks amid cord-cutting, cable providers have been trying to diversify their businesses. Last year, the company launched Altice Mobile in a bid to diversify its revenue sources outside the cable market. The mobile service launched in September 2019 in Altice’s footprint. The service provides a competitive wireless phone service.
Altice Mobile has signed up more than 69,000 customers. The service generated $18 million in revenue in the fourth quarter. Altice aims to make its mobile business profitable in the first year. Charter Communications (NASDAQ:CHTR) and Comcast (NASDAQ:CMCSA) are the other cable providers that have ventured into the wireless market. Dish Network (NASDAQ:DISH), another pay-TV provider, is also gearing up to enter the wireless market through a deal with T-Mobile (NYSE:TMUS).
Altice acquired Service Electric
Altice is in the process of acquiring Service Electric, a regional cable provider that serves the New Jersey market. The company will spend $150 million in cash toward the acquisition. Notably, the company will add thousands of homes and businesses. Overall, the Service Electric deal will help Altice extend its cable footprint and reach more potential mobile customers.
Last year, Altice acquired digital news platform Cheddar for $200 million. Since then, the stock has risen by 25%.
In July last year, Altice added $5.0 billion to its repurchase program. The boost came when the company was executing a prior $2.0 billion repurchase authorization. In 2019, Altice repurchased 73 million shares and returned $1.7 billion to shareholders in the process. The company aims to return $1.7 billion to shareholders this year through stock repurchase.