Allen Praises Charter at Annual Meeting
By Mike Farrell -- Multichannel News, 6/12/2007 1:57:00 PM
Charter Communications chairman Paul Allen heaped praise on the cable operator’s management team at its Tuesday annual meeting of shareholders in Seattle, stating that the St. Louis-based cable operator is in its best position in years.
The annual meeting, held at a hotel near Allen’s hometown every year, was short and sweet -- about 45 minutes, with one short question from the floor -- typical of past meetings. At last year’s annual shareholder’s meeting, Allen praised CEO Neil Smit (hired in August 2005) for his moves to shore up Charter’s balance sheet through a series of debt refinancings and its efforts to launch voice service. This year, he said, those efforts are paying off in spades.
“At last year’s meeting, we spoke to you about Charter’s momentum. This year I want to discuss in some detail how Neil and the team have been executing in the market,” Allen said. “With an intense focus on the fundamentals of the business, that momentum I spoke to you about in 2006 continues to build and is now translating into real results for all of our shareholders, as Charter’s stock has nearly tripled since our last meeting.”
Charter stock closed at $3.84 per share in 4 p.m. trading Tuesday. The stock closed at $1.34 Aug, 29, 2006, the date of its last annual shareholders meeting.
Allen also praised Charter’s efforts to roll out voice service -- Charter now has telephony service available to about 7 million homes, up from about 3 million at the beginning of 2006, and phone penetration is currently about 8% of total homes passed where service is available.
“Not only did Charter set out on a path for growth, but our outstanding management team and, indeed, all of our employees proved they can execute in a highly disciplined manner,” Allen said. “They have succeeded in transforming Charter into a more nimble and efficient organization. We are in a far better position today from an operational and capital structure perspective than we have been in many years. And I am very excited about this company’s future.”
Charter has been on a growth tear in recent quarters, reporting its first quarter of double-digit revenue and cash-flow growth in four years during the fourth quarter of 2006 and matching that increase in the first quarter of 2007. Charter also continued its efforts to refinance debt, increasing liquidity by about $1 billion and reducing interest by about $50 million in a series of deals earlier this year.
“This is a real benefit we have not had for some time,” Allen said of Charter’s financial flexibility.
Smit said in his prepared remarks that Charter will continue to focus on four business priorities: improving the customer experience; increasing sales and retention; focusing resources on high-return investments; and improving the balance sheet.
Charter has already made big strides in each priority area -- it has consolidated call centers and initiated programs to improve service; has reported six consecutive quarters of revenue-generating-unit growth, which has driven both revenue and cash-flow growth overall; grew its bundled customer base from 32% of total customers to 40% in one year and increased its triple-play bundled customers by five-fold in the same time frame; offered value added services to its high-speed-data offering like additional security and wireless networking; and expanded its HDTV and video-on-demand offerings.
Smit added that Charter is also exploring additional revenue opportunities like commercial phone and data service -- it grew commercial revenue by 16% in 2006 -- and advertising sales, which rose by about 13% in 2006.
Smit also pointed to Charter’s debt-refinancing efforts and added that as the operations grow stronger, so does the ability to refinance debt.
“Over time, as our operational improvements result in the kind of consistent [cash-flow] growth we’d like to achieve, we believe there may be opportunities for even more advantageous terms on our long-term debt,” Smit said. “It’s all part of getting our balance sheet and capital structure in shape and aligned with our growth potential.”
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