Charter shares slide as broadband subscriber losses deepen

what happened

According to Seeking Alpha, Charter Communications shares dropped about 7% in premarket trading on Friday after the cable operator released third-quarter results. On a pro forma basis, the company lost 233,000 internet customers, up from a 171,000 decline a year earlier. Of that total, 156,000 came from legacy Charter and 77,000 from legacy Cox.

Revenue rose 9.1% to $14.92 billion, ahead of the $13.74 billion consensus. Adjusted EBITDA climbed 6.9% to $5.94 billion, above the $5.86 billion estimate. Measured with Cox for the full quarter, however, revenue fell 1.5% to $16.51 billion and EBITDA slipped 4% to $6.59 billion. The net loss reached $2.4 billion, or $20.50 a share, mainly due to a $6.33 billion franchise impairment.

The company unveiled a new operating model aimed at returning to subscriber growth and cutting costs. It targets $2 billion in annualized run-rate operating expense savings over 18 months, plus more than $1 billion in expected Cox synergies. Free cash flow came in at $674 million, down $947 million from a year earlier.

why it matters

Charter faces pressure from cheaper broadband offers by wireless carriers. Falling internet subscribers and a decline in pro forma revenue matter for assessing the business. The shares are down 39.7% year to date, while the broader index has gained 7.5%. Execution on the savings plan and roughly $13 billion of full-year capital spending will show how fast cash flow can recover.

market impact

Charter shares: broadband subscriber losses and falling pro forma revenue weigh on the stock

• ▼Charter Communications shares (CHTR) pressure down — internet subscriber losses and falling pro forma revenue weaken the business outlook

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