Altice Mobile customers walk away due to lack of handsets

• New US mobile player experiences a slow start
• Lack of online sales channel for handsets proving a sticking point
• Its a good time for cablecos and other outsiders to disrupt US market, analyst says

Altice has made an unconvincing start as a mobile operator in the US, but it is bullish about its prospects from here on, and with this week's approval of the T-Mobile/Sprint merger from the FCC there could be space in the market for it to make its mark.

The cable operator launched Altice Mobile in early September and in the last three weeks of Q3 signed up 15,000 customers, it announced alongside the presentation of its quarterly results. Uptake has been slower than the company anticipated, leading it to revise down its revenue growth outlook for the full year by a whole percentage point. The reason: lack of available devices.

"We see a tremendous amount of traffic on our sites but they literally stop ordering when they can't get any handsets," said Altice USA CEO Dexter Goei, according to a transcript of the operator's results call.

Customers of Altice's Optimum and Suddenlink cable services can purchase handsets, either outright or using financing, at those companies' retail stores, but the launch of an online sales channel, which will help the firm reach a broader audience, including those that do not take its cable services, is still a couple of weeks away. Two to three weeks, Goei estimated, with the caveat, "hopefully".

The firm's failure to launch online handset sales – "which is expected to be a key driver of Altice USA's anticipated accelerated growth in 2020," the company's Q3 results announcement reads – has led it to lower guidance for full-year 2019. It now expects revenue growth of 2.5%, down from the 3.0%-3.5% range it shared a quarter ago.

Altice Mobile aims to lure customers with its simple pricing strategy. Mobile packages come in at US$20 per month for cable customers or $30 for non-cable customers and are valid for life; the T&Cs clarify that life refers to the base price per line and does not necessarily cover fees, surcharges or taxes.

Those prices seem much more akin to the plans rolled out by market disruptors in Europe than even the low-cost plans currently available in the US; Xavier Niel-backed Eir launched a new MVNO in Ireland last month offering a €9.99 for life plan, for example, while the Frenchman's Iliad business is famously taking the Italian market by storm. Altice's approach isn't wholly surprising, given its legacy as an owner of French cable TV brands and parent company of mobile operator SFR.

It would be a stretch to suggest that Altice could disrupt the US market in a similar fashion, even with the big four looking set to become the big three and concerns over higher prices for consumers remaining. However, there is an opportunity for it to make its mark and carve itself out a bigger slice of the market than it might otherwise have done.

"The T-Mobile/Sprint merger will make a US mobile market entry more attractive for cable operators," noted Antonios Drossos, managing partner at Rewheel Research. "Even more so for outsiders, like Iliad, that likes to shake things up," he added.

There have been reports of Iliad seeking a US entry in recent years, but any talk of the French firm making the trip across the Atlantic now is, of course, pure speculation. However, this is a better time than most for such a company to consider making a move.