Charter Broadband Losses Send Stock Reeling 16.5%

For MoffettNathanson's Craig Moffett, the loss was worse than expected. "Until expectations and results for broadband net adds come into better balance, nothing else matters. Nothing," he wrote to investors. He said the investment community needs to see broadband at least holding steady "to allow for focus on all the other good things that are happening" such as wireless growth. "For better or for worse, the focus will remain on broadband net adds until Charter can prove that the focus can safely be directed elsewhere."

Winfrey, while acknowledging fixed wireless as a competitive challenge, also waved it off as a long-term concern. He called it "an inferior product with limited capacity." Fixed wireless will face capacity struggles when it starts allocating spectrum and capital to maintain profitable mobile services, he said, but added, "we can't promise when that happens." He said Q4 saw fixed wireless and fiber overbuilders doing heavier competitive marketing and promotions.

Similarly, Winfrey said overbuilders don't represent a long-term threat. He said their impact, while "painful," is typically limited to the first year of the overbuild coming online. He said overbuilders aren't reaching their penetration and return-on-investment goals, with the cost of financing having increased. He said that fixed wireless is probably also putting competitive pressure on fiber overbuilders but that fixed wireless' strength is in areas where there is no fiber overlap and fixed wireless is seen as the first competitor cable has had since DSL.

But LightShed Management's Walt Piecyk blogged, "We are not convinced" fixed wireless is a temporary problem and fiber overbuilds are not a significant threat. He said fixed wireless will play an increasing role in the revenue streams of major wireless carriers, meaning it will be difficult for them to throttle back or give up the service absent new 5G applications, regardless of how it affects their mobile networks. He said Charter also could be underestimating wireless operators' capacity available to them through their spectrum holdings.

Charter ended 2023 with 28.5 million residential internet customers, up from 28.4 million at the end of 2022. It lost 1 million residential video subs over that 12-month span, ending 2023 with 13.5 million, and similarly lost 1 million residential voice subs, ending 2023 with 6.7 million. It ended 2023 with 7.5 million residential mobile lines, up from 5.1 million year over year. Winfrey said with 13% of Charter’s internet customers receiving Charter mobile service, it anticipates growth opportunities for several years.

Charter ended 2023 with 420,000 subsidized rural passings, adding 105,000 in Q4 alone, Chief Financial Officer Jessica Fischer said. Customer growth in that subsidized rural footprint is also accelerating, with 34,000 net customer adds in Q4, she said. The company will commit to building about 1.75 million subsidized rural passings, once additional state bids Charter expects are added, said Fischer. She also said its rural digital opportunity fund (RDOF) building will be done by the end of 2026, two years ahead of schedule.

Asked about fixed wireless and low earth orbit satellite competition in NTIA's broadband equity, access and deployment program, Winfrey said LEO's usefulness is in areas where Charter's network won't be deployed. He said Charter is conservative in its modeling of likely customer additions due to BEAD and RDOF. Asked about its citizens broadband radio service spectrum deployment plans as a means of carrying some mobile traffic, Winfrey said Charter has fully deployed in one large market and is expanding to a second this year. A joint venture with Comcast, the Xumo video platform was available across Charter's footprint in October, Winfrey said. He said close to 1 million Xumo boxes are deployed thus far.