Optimum Communications pivots to convergence as Q2 margins expand amid subscriber losses
The telecommunications provider reported expanded EBITDA margins and a $300 million share buyback, while announcing a multiyear mobile partnership with T-Mobile and a planned exit from low-density markets.
Optimum Communications, Inc. reported second-quarter 2026 earnings characterised by expanded gross and adjusted EBITDA margins, driven by disciplined cost management and a simplified go-to-market strategy. Despite these operational improvements, the company faces continued revenue pressure and broadband subscriber losses, which management attributes to intense competition from fibre overbuilders and fixed wireless providers within its West footprint.
To counter these headwinds, Optimum is executing a strategic pivot toward a convergence-led model. The company has entered into a multiyear agreement with T-Mobile to expand its mobile addressable market, targeting growth in wearables and connected devices. Management indicated that convergence average revenue per user (ARPU) will become a primary metric for evaluating customer value as mobile penetration and multi-product bundling increase.
Operational efficiency improved significantly through the deployment of AI-powered tools, including Google CES and Gemini. These technologies contributed to a 20 per cent year-over-year decline in truck rolls and service calls. The company also completed a $300 million tender offer, repurchasing 120 million Class A shares to strengthen its capital structure.
Strategic portfolio simplification remains a key focus, with the divestiture of a noncore advertising agency that generated approximately $100 million in 2025 revenue. Additionally, Optimum plans to exit low-density markets in the West footprint, involving the decommissioning of 48,000 passings scheduled for the third quarter. Management described these areas as having nominal penetration and being challenging to service relative to the core footprint.
Full-year 2026 guidance projects a mid-single-digit decline in revenue and a low-to-mid single-digit decline in adjusted EBITDA, reflecting ongoing subscriber volume pressure. Capital expenditure for the year is targeted between $1.2 billion and $1.5 billion, with higher spending anticipated in the second half to support fibre expansion and hybrid fibre-coaxial (HFC) network modernisation.
The company is also pursuing a consensual comprehensive restructuring of CSC Holdings debt to address upcoming 2027 maturities and enhance financial flexibility. Looking ahead, Optimum expects tougher year-over-year comparisons in the fourth quarter due to the timing of prior rate actions, while noting that broadband ARPU remained stable in the first half.
