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Charter lost 72,000 broadband customers in the first quarter
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The company added 486,000 mobile lines
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With ACP ending, Charter plans to offer a partial subsidy of $15 through May
Like its fellow cable competitor Comcast, Charter isn’t doing so hot with its broadband net additions. But execs on today’s earnings call seemed hopeful that growth will bounce back – just not right away.
Charter lost 72,000 residential and SMB internet customers in the first quarter, following a loss of 61,000 broadband subscribers in Q4 2023. According to Wolfe Research analysts, broadband net losses were slightly worse than the firm's estimate of 68,000.
The operator serves a total of around 32 million broadband customers.
CEO Chris Winfrey attributed the customer drop to the usual suspects; a low move environment and competition from wireline overbuilders. The company also saw a smaller impact from “fewer low-income connects,” as the Affordable Connectivity Program (ACP) nears its end.
“With the continued temporary impact from cellphone internet competition and a potential headwind from the end of ACP, we will continue to see short-term customer growth headwinds,” said CFO Jessica Fischer. “Despite these short-term challenges, we are competing well. We have a very attractively structured balance sheet, and we’re focused on driving healthy EBITDA growth in 2024.”
Charter expects capital expenditures for full year 2024 to total between $12.2 billion and $12.4 billion, which will include network upgrade spending of roughly $1.6 billion.
The operator recently pushed back its completion date for DOCSIS 4.0 upgrades to 2026, compared to its initial target of 2025. Winfrey in February said the delay was related to certification of distributed access architecture (DAA) equipment taking longer than expected.
He reiterated on today's earnings call the company expects to finish network upgrades by 2026 and that Charter currently offers symmetrical 300 Mbps, 500 meg and 1-gig speeds in markets where it’s already completed high-split upgrades.
ACP
Charter has around 5 million customers enrolled in ACP – just over 20% of the program’s appromiately 23 million base.
Fischer said the company “has a number of ways” to assist subscribers losing their ACP subsidy, including its Spectrum Internet Assist and Spectrum Internet 100 plans.
The company has not made any announcements about a specific ACP replacement (we’ve listed a few options other ISPs have laid out here), but Winfrey said Charter will offer a partial ACP subsidy through the end of May.
While the FCC has said the partial ACP subsidy will be a maximum of $14 per month for non-tribal areas (less than half of the usual $30), Winfrey said Charter will round up that credit to $15 “just to make it clearer to customers.”
Wireless
Charter also touted there’s plenty of room to grow for its mobile virtual network operator (MVNO) service.
The company in Q1 added 486,000 mobile lines, however that was around 200,000 fewer than the 686,000 mobile net adds in Q1 2023. Charter currently serves a total of 8.3 million mobile lines.
It also offers Spectrum One, a bundle of home internet, mobile and Wi-Fi services. Winfrey talked a bit about how he thinks of convergence. He argued mobile today, and perhaps “always has been,” is just an extension of a broadband connection.
“If you’re pulling out of the driveway right now and I say, ‘who’s your internet provider right now?’, you’d say ‘I don’t know, I don’t care, it just has to work and it has to be fast,’” Winfrey said. “And if that’s people’s definition increasingly of broadband connectivity, then we’re the only provider in our footprint that can provide that uniform, ubiquitous broadband internet in a seamless way.”
He added Charter’s 5G cellular service acts as a backup when internet and Wi-Fi aren’t available, despite 5G being “the slowest portion of our network.”
By the numbers
Consolidated revenue of $13.7 billion was flat year on year and was primarily driven by a 37.8% increase in mobile service revenue growth (which came to $685 million) and 1.9% growth in internet revenue ($5.8 billion).
Net income was up 8.4% YoY at $1.1 billion.