Shares of Optimum Communications, Inc. OPTU have declined 28% in the past month, putting the spotlight on whether the sharp pullback reflects deteriorating fundamentals or creates an opportunity if the company’s operational initiatives gain traction. Compared with larger telecom peers such as AT&T Inc. T and Verizon Communications Inc. VZ, Optimum faces a more challenging near-term growth profile, particularly in broadband.
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OPTU Faces Persistent Broadband Competition
Optimum’s broadband business remains under pressure. Broadband primary service units declined by 40,000 in the second quarter, compared with a 35,000 loss in the year-ago period. Elevated promotions and intense competition in the company’s West footprint continue to pressure churn and make subscriber stabilization uncertain.
This contrasts with the broader operating trends at larger peers. Verizon has been benefiting from improving wireless subscriber trends and broadband expansion, while AT&T is also pursuing growth through wireless and fiber connectivity.
Optimum’s Revenue Trends Remain Challenged
Residential revenues fell 6.7% year over year to $1.54 billion in the second quarter, while residential ARPU declined 1.1% to $132.22. The company’s total revenue fell 5.8% year over year to $2.02 billion.
Optimum expects full-year 2026 revenue to decline in the mid-single digits. This outlook leaves the company facing a more difficult growth environment than larger telecom operators that are benefiting from expanding broadband, wireless or fiber businesses.
OPTU Shows Progress Beyond Broadband
Optimum is making progress in mobile and newer video offerings. Mobile lines increased by 50,000 to 724,000, while mobile penetration rose to 8.9%. Newer video packages also reached 18% of the residential video base.
The company’s convergence strategy could help improve customer retention by encouraging households to purchase multiple services. Optimum reported that convergence ARPU increased 2.4% year over year to $79.80 in the second quarter, providing one of the clearer offsets to weakness in the core broadband business.
Verizon is pursuing a similar convergence strategy through wireless and broadband offerings, while AT&T is also investing in integrated connectivity. This makes customer retention and cross-selling important competitive factors across the telecom industry.
Optimum Balances Efficiency With Heavy Investment
Optimum is making progress on costs. Adjusted EBITDA declined 2.2% year over year to $785.7 million, but the adjusted EBITDA margin expanded 140 basis points to 38.8%. Operating expenses, excluding share-based compensation, improved 5% year to date through the second quarter.
Still, management expects EBITDA to decline in the low to mid-single digits in 2026. Capital spending also remains substantial, with full-year capital expenditures expected at $1.2 billion to $1.5 billion.
The capital intensity highlights the challenge for OPTU. The company must continue investing in its network and customer offerings while managing declining revenue and EBITDA. Larger peers face similar capital requirements, but Verizon, for example, expects 2026 mobility and broadband service revenue to grow 2%-3% while maintaining substantial investment in network infrastructure.
AT&T and Verizon Offer Different Risk Profiles
AT&T and Verizon provide useful benchmarks for investors assessing OPTU’s recent decline. Verizon carries a Zacks Rank #3 (Hold), along with a Value Score of A, Growth Score of C and Momentum Score of A. Its shares had gained 18.3% over the six months covered in the available Zacks report, supported by improving operating trends and a higher 2026 earnings outlook.
Optimum’s profile is less favorable from a growth and momentum perspective. The stock has a Value Score of B, but its Growth Score and Momentum Score are both D. The contrast suggests that OPTU’s recent decline has improved its value characteristics without resolving the operating issues weighing on growth and stock-price momentum.
A Lower Price Does Not Remove OPTU’s Risks
OPTU currently carries a Zacks Rank #3 (Hold). The combination of a B Value Score with D Growth and Momentum Scores presents a mixed setup. Zacks Style Scores are designed to complement the Zacks Rank by evaluating value, growth and momentum characteristics, with A and B representing the stronger grades. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The recent 28.1% decline may make OPTU more attractive from a valuation standpoint, but the stock still faces meaningful operational risks. Broadband losses, declining residential revenue and expected EBITDA pressure remain important concerns.
For OPTU to establish a more durable recovery, broadband trends will likely need to stabilize while mobile adoption, convergence and cost efficiencies continue to improve. Until those factors translate into better revenue and earnings trends, AT&T and Verizon offer investors larger-scale alternatives with more established operating momentum.
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This article originally published on Zacks Investment Research (zacks.com).
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