Q2 Video Subscriber Losses Double at Charter

Broadband growth flat but wireless additions outpace expectations
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Charter Communications lost about 150,000 residential video customers in the second quarter, more than double the 73,000 subscribers it lost in the prior year, as broadband additions were flat and wireless growth outpaced expectations.

Charter ended the quarter with 15.8 million video customers, down about 2.5% from the prior year in what is typically a seasonally weak period as students go home for the summer and some customers leave for summer residences.

Broadband growth was slightly better in the period -- Charter added about 221,000 high speed data customers, up from the 218,000 it added in Q2 2018. Spectrum Mobile, the wireless service the company introduced about a year ago as part of its MVNO agreement with Verizon, added 208,000 lines in the period, compared to 176,000 lines in the prior year and outpacing analysts estimates of around 150,000 additions.

Those additions helped boost revenue by 4.5% to $11.3 billion and cash flow 3.3% to $4.2 billion.

Charter chief Tom Rutledge speaking at CableTec Expo 2017

Tom Rutledge

"We are realizing the benefits of consolidating three large cable operators under one centralized operating strategy, with lower customer churn, fewer service transactions per customer and improving customer satisfaction resulting in growth of over 1 million customer relationships year-over-year," Charter chairman and CEO Tom Rutledge said in a statement. "In the second quarter, free cash flow grew nearly 40% year-over-year. Our core business is strong and we are positioned to be the network of choice today and in the future."

In a research note, Evercore IS Group media analyst Vijay Jayant said Charter missed his subscriber and financial estimates, and expected that to weigh on shares Friday -- they were down about 5% in pre-market trading to $383.85 each July 26. But he said there is still upside to the stock.

“With the stock up 42% [tear-to-date], we’d expect some profit taking here, but continue to find the underlying leveraged equity growth story attractive, and retain our Outperform rating and $450 price target,” Jayant wrote. 

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