Altice USA has obtained $1 billion in financing via an asset-backed securitization (ABS) deal announced Friday. The deal has the distinction of being the first in the broadband industry to be secured by receivables for service delivered over hybrid-fiber coax (HFC) — rather than all-fiber — infrastructure.
The Altice deal was made in partnership with Goldman Sachs and TPG Angelo Gordon. The loan facility matures in January 2031.
ABS financing emerged in the broadband industry several years ago. An ABS loan is secured by a portion of the borrower’s receivables. Lenders look for low-risk receivables and are willing to offer favorable interest rates.
In Altice’s case, those receivables are “certain receivables generated by the company’s Bronx and Brooklyn service area and network assets, primarily the HFC network.”
Other broadband providers that have entered into ABS deals – including Frontier, Consolidated, Ting, and Zayo — have secured them with fiber broadband assets.
HFC infrastructure is primarily used by cable broadband providers, such as Altice. Generally, HFC networks deliver the fastest speeds in a market unless another provider has deployed fiber broadband there. In general, fiber broadband can support faster speeds than HFC, particularly on the upstream.
Cable broadband providers, including Altice, have been upgrading their infrastructure to boost speeds. In some areas, Altice has deployed fiber broadband supporting speeds up to 8 Gbps, but the company has also been upgrading its HFC networks to boost the speeds that those networks can support.
Not All HFC is the Same
Nate Edwards, Altice’s executive vice president for Optimum network services for Altice, told Telecompetitor earlier this year that, where the company is upgrading its HFC infrastructure, it is using DOCSIS 3.1 and mid-splits.
DOCSIS 3.1 is a relatively recent and widely used version of the DOCSIS cable modem standard. Mid-splits reconfigure the coaxial portion of the HFC connection to support higher speeds, particularly on the upstream path.
Although DOCSIS 3.1 is not as advanced as the latest DOCSIS 4.0 standard, Edwards told us that, where Altice upgrades its HFC infrastructure, it will support 2 Gbps downstream speeds. That’s a level that can be quite competitive, depending on pricing and other factors.
An Altice spokesperson declined to offer details on the type of HFC infrastructure the company has in the Bronx and Brooklyn. But Telecompetitor got some information from Highspeedinternet.com, a website that compiles broadband availability data by ZIP code.
According to that data, Altice offers service in many ZIP codes in the two New York City boroughs, using cable broadband in some of those ZIP codes and fiber broadband in others.
The data shows Altice offering 980 Mbps service in all the cable broadband ZIP codes that Telecompetitor checked. Perhaps network upgrades have not yet been completed there. Alternatively, the information may not be the very latest. Or perhaps Altice has made the upgrades but hasn’t begun offering the maximum speeds that the upgrades can support.
Interestingly, Verizon offers service at 2 Gbps in many of the same Brooklyn and Bronx ZIP codes that Altice serves. Nevertheless, Altice’s lenders apparently consider the Alice network to be sufficiently competitive.
Taking all this into consideration, the Altice ABS deal is clearly a vote of confidence for cable companies’ HFC upgrades. Perhaps we will see more ABS deals secured with HFC assets moving forward. Additional information about the Altice deal can be found in this press release.
