Paul Allen Praises Cable Lieutenant
By Mike Farrell -- Multichannel News, 8/30/2006 9:39:00 AM
Charter Communications chairman Paul Allen heaped praise on his second in command – CEO Neil Smit – at the cable operator’s annual shareholders meeting in Seattle Aug. 29, telling the audience that he is pleased with Smit’s first year on the job and the progress the company has already made.
Charter has struggled under the heaviest debt load of any other cable company – it has about $19.5 billion in debt – but has shown some improvement in the second quarter, when it reduced basic customer losses to 37,800 from 41,000 a year ago, and reported revenue and cash flow growth of 8.7% and 4.2%, respectively.
“With Neil at the helm, Charter has made significant progress across its entire business,” Allen said, pointing out Smit’s hiring of several top executives, the company’s rollout of telephone service, debt refinancing and the sale of non-strategic systems that have raised cash to help pay down debt.
“As a direct result of the financial and strategic actions we’ve taken, Charter today is a more solid company with growing potential,” Allen said.
Smit, who was named CEO in August 2005, said that while there is still work to be done, Charter will continue to focus on four initiatives: improving the customer experience; focusing on targeted marketing of new services; focusing on high-return investments, especially in telephony; and its opportunistic approach to improve liquidity, extend debt maturities and de-lever the balance sheet.
Smit said that Charter has already made some headway on all four fronts: it has centralized its customer care operations to better serve customers and reduce response times; its targeted marketing program has translated into higher revenue generating unit growth and higher monthly revenue per customer; telephony is available in 5 million marketable homes and Charter has raised about $1 billion from the sale of non-strategic systems and has refinanced about $6 billion in debt.
Charter closed on two sales in July – 242,600 subscribers in West Virginia and Virginia to Sudden Link Communications for about $770 million and 75,200 subscribers in Kentucky and Illinois to NewWave Communications for about $126 million. A third deal – the sale of 43,700 subscribers in Nevada, Colorado, New Mexico and Utah to Orange Broadband for an estimated $75 million – is expected to close in the third quarter. Allen said later in the meeting that while he expects consolidation to continue in the industry, Charter has no current plans to either buy or sell assets just yet.
“I think that there is probably going to be some further consolidation in the industry and opportunities for systems to be swapped as well between MSOs to further concentrate their systems,” Allen said. “But there is nothing in the offing for us to announce.”
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