Charter adds 400K broadband subs in Q2, eyes enterprise runway

Charter Communications executives eyed gains in the enterprise market, noting the company is working to position itself to take share as business activity returns to normal after a pandemic-related slowdown.

Net income attributable to Charter shareholders rose 33% year-on-year in Q2 2021 to $1.02 billion, with consolidated revenue up 9.5% to $12.8 billion. Internet revenue grew 15.2% to $5.2 billion, video revenue was flat at $4.3 billion and voice revenue fell 12.7% to $394 million. Mobile revenue jumped 67.5% to $519 million.

In its Commercial Services segment, small and medium business (SMB) revenue grew 6% year on year to $1.04 billion, while enterprise revenue rose 5.1% to $636 million. Analysts at MoffettNathanson noted the Commercial Services segment growth rate “was the fastest since” Charter’s acquisition of Time Warner Cable in 2015.

On an earnings call, Charter CFO Christopher Winfrey said that “as businesses recover, new businesses open, the share flow opportunity for us is growing” in the SMB segment.

“What you’re seeing is accelerated net add growth accompanied by less price pressure which is resulting in accelerating sequential revenue growth in SMB, and we’re steadily marching down a path to continue to go higher on both,” he added. “I think the runway for us on SMB continues to be long.”

Winfrey noted Charter also has room for growth among larger enterprise customers, explaining its fiber reach allows it to “drive connectivity services as well as software-defined network overlay products” such as SD-WAN and unified communications.

“So our opportunity there is not only to provide more fiber connectivity but to establish ourselves in the marketplace for these additional services and increase the stickiness of our fiber connectivity with additional product. And we’re early on in that,” he said.

The CFO said Charter’s sales activity in the enterprise segment has surpassed pre-pandemic levels, but it will take some time for the impacts of that to flow through to its enterprise revenue “because those sales have long cycle times to installation and therefore revenue conversion into billing.”

Tom Rutledge, Charter’s CEO, also highlighted expected share gains in the residential segment. He stated the “broadband market continues to expand both through housing growth, population growth and adoption,” adding “we think we can continue to take share.”

Charter added 400,000 internet subscribers in Q2, including 365,000 residential and 35,000 SMB customers. It ended the quarter with 27.7 million residential internet subscribers, up year-on-year from 26.3 million, and 1.9 million SMB internet customers compared to 1.8 million in Q2 2020.