Charter Losing More Subscribers

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Charter Communications released preliminary fourth-quarter results Friday morning, reporting strong revenue and cash-flow growth but an increase in losses of basic subscribers.

The MSO announced the unaudited fourth-quarter results early due to a planned refinancing of its credit facilities. It expects to release its full-year and fourth-quarter financial results Feb. 28.

Revenue for the period is expected to be about $1.4 billion, an 11.7% pro forma increase over the same period in 2005. Cash flow for the quarter should be about $503 million, a 10.3% pro forma increase over the previous year.

But basic-subscriber losses -- thought to be on the decline after Charter reported that it lost just 9,100 basic customers during the third quarter -- appear to be on the upswing.

Charter said it expects to lose 43,000 basic customers during the fourth quarter, compared with the 16,500 customers it lost during the fourth quarter of 2005.

Charter also showed slowing growth in both digital-cable and high-speed-Internet additions. Digital customers rose by 40,500 in the most recent period (compared with 49,800 in 2005) and high-speed-Internet subscribers increased by 59,000 (versus 73,800 in 2005).

On the telephony front, Charter said it expects phone subscribers to more than triple compared with last year (106,200 additional customers in the fourth quarter versus 31,300 phone additions in the same period in 2005). Charter added 82,000 phone customers in the third quarter of last year.

Investors didn’t appear to be overly concerned, as Charter stock rose about 8 cents per share to $3.33 each in early trading Friday.

According to a separate statement, Charter hired J.P. Morgan Securities, Banc of America Securities and Citigroup Global Markets to arrange and syndicate a refinancing and expansion of its existing $6.85 billion senior secured credit facilities of subsidiary Charter Communications Operating. The proposed transaction includes an $8.05 billion senior-secured-credit facility consisting of a $1.5 billion credit line, a $1 billion new term facility, a $5 billion refinancing-term loan and a $550 million second-lien term loan.

Charter expects the refinancing to be completed within the next few weeks.

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