- Charter dropped 117,000 broadband subs in Q2, faring worse than analysts expected
- Execs downplayed broadband declines by spotlighting mobile growth and a new T-Mobile deal
- The operator thus far has been “limited” in gaining business wireless customers, said CEO Chris Winfrey
Bad broadband beats won’t let up for cable, as Charter this morning posted worse-than-expected subscriber losses. But the company remains positive about where its mobile business is heading – a sentiment likely bolstered by its new deal with T-Mobile.
Charter shed 117,000 broadband subs in Q2, higher than the 75,000 BNP Paribas analysts predicted. In their view, Charter suffered “the worst ever residential losses in their ‘core’ footprint areas.” Ouch.
The results came as a surprise to Dell’Oro Group VP Jeff Heynen as well. “I thought Charter was slowing the broadband losses by bundling mobile services, just as it did in Q1,” he told Fierce.
The operator on the earnings call wasn’t too specific on why the losses turned out so badly, mainly pointing to low move activity from consumers. “Some of these typical seasonal drivers just aren’t present right now, particularly when it comes to new home purchases and folks moving because of new jobs,” Heynen added.
Charter makes mobile moves
But execs played down the poor broadband showing by focusing on Charter’s mobile virtual network operator (MVNO) alliance with T-Mobile, which will see Charter (and Comcast) offer business wireless service on T-Mo’s network.
“We look forward to working with T-Mobile from a financial perspective,” stated Charter CEO Chris Winfrey, though he declined to comment on how much mobile service will cost on the MVNO. He did give a nod to Charter’s existing partnership with Verizon, which runs the 5G network for both Charter and Comcast's residential wireless customers.
“It’s always good to have multiple strategic relationships,” he said, adding Charter has been “somewhat limited” in its ability to go to market in the business segment.
Losing the business MVNO deal to T-Mobile might cost Verizon its existing contract with the cable cos, according to New Street Research, as renewal negotiations are likely to start soon. “We suspect Verizon wanted to protect their dominant market share in mobile amongst enterprises,” said NSR analyst Jonathan Chaplin in a note this week.
All told, Charter ended the quarter with 500,000 new Spectrum mobile lines. Winfrey pointed out how Charter’s been “upselling additional lines” to existing mobile households and he feels confident the wireless biz is “becoming a real tailwind to our free cash flow growth.”
We shall see how Charter’s broadband losses compare to Comcast, which will report Q2 earnings next Thursday. Heynen thinks Charter could turn a corner in Q3, “as Charter has historically benefited more than other operators from the typical seasonality we see with school starting [and] people getting settled into new homes.”
Charter this quarter also announced its $34.5 billion acquisition of Cox Communications. While the company did not provide any new developments about the deal, CFO Jessica Fischer said the Trump administration’s new tax policies will help Charter continue long-term network growth, “including the significant investments we’ll make in the Cox network.”