Charter Communications lost 61,000 internet customers (including residential and SMB) in the fourth quarter and 257,000 video customers. On the voice services side, the company lost 251,000 wireline voice customers and added 540,000 mobile lines.
Charter president and CEO Chris Winfrey addressed investors during the Feb. 2 earnings call, saying, “In 2023, we added 155,000 internet customers, and we added nearly 2.5 million Spectrum Mobile lines for a growth of nearly 50%. At the end of 2023, we had more than 7.7 million total mobile lines. Only 13% of our internet customers now have mobile service, and we expect mobile penetration to meaningfully grow over the next several years as the quality and value of our converged connectivity services gains wider recognition. Revenue was up by 1% in 2023, while EBITDA grew by 1.3% and 2.5% when excluding advertising. While we’re executing well on our long-term strategic initiatives, and Spectrum One is working to drive mobile growth, internet growth in our existing footprint has been challenging, driven by admittedly more persistent competition from fixed wireless 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.”
Further addressing the competitive environment, Winfrey added, “Fixed wireless access, while an inferior product with limited capacity in geographic coverage, which is fluid, is often marketed by the phone companies at a perceived lower price to their existing customers.”
Charter believes the impact of fixed wireless is temporary.
“Our internet product is faster and more reliable,” said Winfrey. “Our pricing is lower when similarly bundled with mobile. Customer bandwidth needs continue to increase, and MNOs will face capacity challenges and will be required to allocate their spectrum and capital to maintain profitable mobile services.”
Winfrey also discussed Charter’s plan for long-term growth, which includes continued expansion in rural markets, acceleration of greenfield, market fill-in and serviceability builds, and prioritizing the customer experience.
He added, “In the short term, we are leaving no stone unturned as it relates to our go-to-market approach. Ultimately, the speed at which we can return to a more normalized broadband growth rate hinges on the assumption that our competitors’ capital is not limitless for poor ROI projects and, frankly, our execution on our strategic initiatives. So, we’re keeping our heads down and executing on a clear strategy to ensure we can offer customers the best products and services across our entire footprint, all while saving customers money, not only now, but in the future.”
Eying Spectrum One, rural growth
Charter CFO Jessica Fischer further addressed the company’s efforts and results in consumer broadband, saying, “Our Spectrum One product continued to perform well. Customers who signed up for our Spectrum One product in the fourth quarter of 2022 reached their 12-month anniversary this past quarter. Those promotional roll-offs didn’t drive incremental internet churn. In the quarter, we had slightly lower mobile line gross adds year-over-year tied to internet gross additions with a lower churn rate year-over-year and flat sequentially. We continue to see healthy data usage at our Spectrum One promotional lines and remain confident that these lines will perform well as long-term customers.”
She also addressed rural growth, reporting that Charter activated 105,000 rural passings in the fourth quarter, ending the year with 420,000, for a total growth of 295,000 in 2023. Customer growth in Charter’s subsidized rural footprint accelerated as well, and they added 34,000 net customers in the fourth quarter.
“In 2024,” said Fischer, “we expect to activate approximately 450,000 new subsidized rural passings, about 50% more than in 2023, with seasonality in the first quarter tied to the winter weather."
Charter’s capital expenditures for the fourth quarter totaled $2.9 billion, with $978 million spent on line extensions—$50 million more than was spent in Q4 2022. Fischer reported that Charter expects to spend approximately $4.5 billion on line extensions and approximately $1.6 billion on network evolution in 2024.
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