Charter Now Largest Rural Broadband Provider, CEO Says
Charter Communications is now the nation's largest rural broadband provider and builder, President Chris Winfrey said Friday as the company announced Q1 earnings. He said rural construction helped Charter add 76,000 internet customers in the quarter, during which the company also activated 44,000 subsidized rural passings. He said the 2023 goal is buildouts to 300,000 additional rural passings.
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Chief Financial Officer Jessica Fischer said Charter expects to spend $6.5 billion to $6.8 billion on capital expenditures this year, including rural construction and upgrades to its network.
The company has done network upgrades in two mid-sized markets that allow 1.2 Gbps speeds, and is doing the same for an additional six, Winfrey said. Starting late next year and running through 2025, Charter will start further network efforts allowing it to go to 1.8 Gbps, he said.
Winfrey said its Advanced WiFi internet service -- now in 40% of its residential customer households and just launched to small and mid-sized businesses -- lets Charter offload mobile traffic that had been carried on its Verizon mobile virtual network operator agreement. He said about 15% of its mobile traffic had been through its MVNO lease, but that's "decreasing pretty quickly" to around 13% over the course of a few months. He said that decline will continue due to Advanced WiFi and use of the citizens broadband radio service spectrum.
Charter is considering changes to its mobile and broadband connectivity where mobile lines wouldn't necessarily be sold at the individual level and broadband sold at the household level and on two separate bills, Winfrey said. Instead, it could be "a single product," he said, but didn't elaborate. The Xumo streaming platform joint venture with Comcast should be deployed by year's end, Winfrey said.
For the quarter, Charter had revenue of $13.65 billion, up from $13.2 billion in Q1 2022. Mobile service revenue of $497 million was up 28% year over year. It ended the quarter with 28.5 million residential broadband customers, essentially flat year over year; 14.3 million residential video customers, down 700,000; and 7.5 million residential voice customers, down 200,000. It ended the quarter with 6 million mobile lines, up from 5.3 million in Q1 a year ago. Charter shares closed Friday at $368.70, up 7.6%.
For cable ISPs, broadband subscriber activity continues to lag due to all the volume of new additions that came in the early part of the pandemic and to fewer people moving and lower housing starts, "as well as a small swing back into wireless substitution," Winfrey said. All of that "is temporary in nature ... there is no reason to think that we don’t get back into the normalized market environment," he said.
While Charter's broadband growth "isn’t anything to write home about ... the footprint expansion strategy is doing exactly what it was designed to do," MoffettNathanson's Craig Moffett wrote investors.