Charter adds 77,000 broadband subscribers, details $5 price hike

Charter Communications reported favorable broadband subscriber growth in the second quarter, faring better than its competitors. Executives on the earnings call also elaborated on a Spectrum Internet price increase that will take effect in August.

The operator added 77,000 residential and business broadband customers, an improvement to the 21,000 customers it lost in Q2 2022. Charter saw the highest broadband subscriber gain this week, compared to AT&T (35,000 loss), Comcast (19,000 loss) and Verizon (54,000 Fios net additions).

Analysts from New Street Research noted Charter’s broadband adds were much better than expected but broadband average revenue per user (ARPU) growth was “disappointing.”

Q2 ARPU was $120.25 for residential customers and $164.56 for small and medium-sized business (SMB) subscribers. NSR said the light ARPU growth could partly be due to a large share of mobile adds taking Charter’s free line offer.

Charter earlier this month disclosed it will raise the price of its Spectrum Internet service by $5 per month, increase the cost of its bundled voice services by $5 per month, as well as its broadcast TV surcharge by $1 per month.

The operator previously implemented a $5 monthly price hike in November 2022.

CFO Jessica Fischer said on the earnings call the $5 retail internet increase applies to “flagship and above customers, but it’s coupled with a new auto-pay discount of five dollars.”

“So customers who are currently on auto-pay, or who opt into auto-pay, won’t see a change in their overall price for internet,” she said.

Fischer also attributed the reduction in ARPU to “a headwind from the lighter mix of non-video customers on lower priced video tiers.”

“Ultimately, our strategy is never to sort of grow the business just based on price. We aim to have competitive prices and to have good penetration because of that…but that doesn’t mean we’re sort of immune to the inflation impacts,” she added.

ACP success

Regarding the Affordable Connectivity Program (ACP), Charter CEO Chris Winfrey said the company’s strategy is to “respond to the governmental requests” from the White House, Federal Communications Commission (FCC) and Congress of using the program.

“We’ve been, I think, the most successful at doing that – of providing a way for new customers to get into broadband, who are in a low-income space, as well as for existing customers to be able to stay in the broadband space in times of affordability issues,” he said.

Winfrey didn’t state how many Charter customers take the ACP subsidy, but the FCC has said Charter, Cox and Starry are the largest ACP providers using alternative verification processes for program eligibility.

Analysts have predicted the ACP will run out of money sometime next year, unless Congress approves more funding. Winfrey added he is “hopeful” the ACP will be renewed.

“We’ve always had programs like Spectrum Internet Assist and low-income programs that we can accommodate and dealing with that at the back end,” he said. “I’m hopeful that’s not the case and that it gets renewed.”

Q2 results

Consolidated revenue of $13.7 billion grew 0.5% year on year, which Charter said was driven by growth in residential internet revenue, residential mobile service revenue and higher mobile device sales. Internet revenue increased 3.1% year on year to $5.7 billion.

Capital expenditures totaled $2.8 billion and included $1.1 billion of line extensions. Net income dropped from $1.47 billion in Q2 2022 to $1.2 billion.