Charter Goes Positive

UPDATED: Video Sub Gains Counter Cord-Cutting Narrative
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Charter Communications continued cable’s streak of improved basic video customer growth, adding 12,000 customers in the third quarter, its first positive growth quarter since Q4 2014.

Charter also increased high-speed data customer additions, adding 131,000 in the period versus 94,000 additions in the same period last year. Telephony customer additions also increased to 37,000 in the quarter, compared to 29,000 additions in the prior year.

"Clearly, 2Q15 was not a negative inflection point for the industry, and this morning's results from Charter and Time Warner Cable validate this thesis of ours," analyst Vijay Jayant, of Evercore ISI, said in a note to investors. Pay TV operators struggled in the second quarter of this year, raising fears of a spiral of subscriber losses (see Kagan: Cord-Cutters Drive Pay TV Losses To 625K). Craig Moffett, of MoffettNathanson, commented in part: "It’s time to change the narrative about cord cutting."

Overall residential customer relationships grew by 97,000, with triple play sell-in improving year-over-year to 63% of total residential video sales, the company said. Residential primary service units (PSUs) increased by 180,000 versus a gain of 114,000 in the prior-year period.

The customer gains translated into improved financial results. Revenue in the period was up 7.2% to $2.45 billion and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8.5% to $850 million.

“Our accelerating customer and PSU growth is being driven by our successful efforts to transform Charter into an organization that delivers outstanding products, service and customer value,“ CEO Tom Rutledge said in a statement. "Our operating strategy, which includes continued investment in superior products at attractive price points, with a highly-skilled US-based labor force, has accelerated our customer growth, leading to faster EBITDA growth and free cash flow generation. We look forward to applying the same strategy across our larger footprint, following the close of our Time Warner Cable and Bright House transactions, driving greater value for customers and shareholders.”      

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