Charter Lost 149,000 Broadband Subs in the Second Quarter
'The cell phone companies will face challenges as a customer bandwidth demands continue to grow," Charter's CEO said.
Ted Hearn
WASHINGTON, July 26, 2024 – Charter Communications on Friday said it lost 149,000 broadband subscribers in the second quarter, a big drop from its prior quarter loss of 72,000 subscribers.
But Charter's stock soared 16% on the news in early trading because Wall Street analysts were expecting a broadband subscriber loss of 271,000, according to KeyBanc analyst Brandon Nispel.
"While we saw underlying residential Internet subscriber net additions worsen year over year, it was not nearly as bad as consensus expected ..." Nispel said in a client memo Friday.
On a conference call with Wall Street analysts ahead of Friday trading, Charter CEO Christopher Winfrey said the broadband subscriber losses in the most recent quarter were "driven by the end of the Affordable Connectivity Program."
The ACP provided low-income households with $30 monthly discounts on their Internet bills funded by the federal government. The program, which peaked at 23 million subscribers, ran out of funding on May 31. Charter had about 5 million ACP enrollees.
"We've retained the vast majority of ACP customers so far. The real question is customers' ability to pay not just now, but over time. I expect we will have a better view of the total ACP impact once we're inside the fourth quarter," Winfrey said.
MoffettNathanson Senior Managing Director Craig Moffett issued a client note that suggested he found Charter's stock surge puzzling.
"Today, Charter reported a loss of 'just' 149,000 broadband subscribers. Yes, as was the case with Comcast, that’s the worst quarter ever for broadband. But the loss was roughly half of what had been feared by consensus. So… yippee? Huh?," Moffett said.
At the end of the second quarter, Charter served a total of 30.4 million residential and business (SMB) Internet customers.
Addressing competition from fiber overbuilders and fixed wireless access operators like T-Mobile and Verizon, Winfrey said: "We remain confident in our ability to return to healthy long-term growth. Our internet product is faster and more reliable."
He added, "The cell phone companies will face challenges as a customer bandwidth demands continue to grow."
Charter said it added 557,000 residential and SMB mobile lines to end the quarter with a total of 8.8 million mobile lines.
Second quarter revenue came in at $13.7 billion, up 0.2% year-over-year. Net income was $1.2 billion in the second quarter.
Second quarter adjusted EBITDA of $5.7 billion grew by 2.6% year-over-year. Second quarter capital expenditures totaled $2.9 billion and included $1.1 billion of line extensions.
Charter ended the quarter with $96.5 billion in debt. It also repurchased 1.5 million Charter shares totaling $404 million at an average price of $271 per share.
