Charter sheds 61K broadband subs but touts progress in network upgrades

After three consecutive quarters of positive broadband net additions, Charter Communications reported it lost 61,000 internet subscribers in Q4. However, it’s continuing to progress in network upgrades.

CEO Chris Winfrey said Charter “fully launched” symmetrical speed tiers in two markets and “currently launching in six more,” but did not name the markets or the available speed tiers.

But with those rollouts, Charter has completed network upgrades in its Phase 1 markets, meaning it implemented high-split architecture to increase its usable spectrum to 1.2 GHz across 15% of its footprint. The company has said that upgrade would enable speeds of 2 Gbps downstream and 1 Gbps upstream.

“We’ll also begin to work in our step two markets with DAA [distributed access architecture] later this year,” Winfrey added on the earnings call.

Despite losing 61,000 residential and SMB broadband subs (compared to 105,000 net adds in Q4 2022), Charter ended 2023 with 155,000 total internet net additions.

“Internet growth in our existing footprint has been challenging,” said Winfrey, pointing to competitive pressure from fixed wireless access and “similar levels of wireline overbuild activity.”

“Small changes in gross additions and churn in a low transaction environment have driven outsized impacts to net gains, which was clearly the case as we moved through the last quarter,” he continued.

Charter in Q4 touted growth across its rural footprint, as it activated 105,000 subsidized rural passings in the quarter.

The operator anticipates the Broadband Equity, Access and Deployment (BEAD) program will provide “additional opportunities” for rural buildouts. But Winfrey said, “the potential is uncertain, given our concerns regarding how states will apply NTIA guidelines.”

“We’ll focus BEAD investment in states where the rules are conducive to private investment,” he commented.

ACP customers

As the government’s Affordable Connectivity Program (ACP) faces a possible shutdown, Charter execs took the time to highlight the impact ACP has had on its subscriber base.

Charter currently has just over 5 million households that receive the ACP subsidy, CFO Jessica Fischer noted, “all for wireline internet.”

“Very few of those customers use ACP to upgrade to higher speeds…but many do have our flagship speed or higher or do take other services from us,” she said.

In case the ACP ends this spring, Fischer said Charter is “designing programs” to keep customers connected.

“There’s no doubt that the end of the program would be disruptive for many,” she added. “Nonetheless, we will have the full benefit of our high-quality sales and retention force as well as our mobile product, which saves customers hundreds of dollars, to preserve connections.”

Q4 financials

Consolidated revenue of $13.7 billion was up 0.3% year on year, mostly driven by residential mobile service revenue growth of 35.7%. Internet revenue increased 3% YoY to $5.8 billion, which Charter attributed to growth in internet customers in the last year as well as “promotional rate step-ups and rate adjustments.”

Q4 net income declined from $1.2 billion to $1.1 billion year on year.