Charter’s incoming CEO says there won’t be a seismic shift in strategy

If it ain’t broke, don’t fix it. That’s basically the motto of soon-to-be Charter Communications CEO Chris Winfrey.

Winfrey is currently COO and is set to take over from long-time CEO Tom Rutledge on December 1. Asked on the operator’s Q3 earnings call whether his tenure will entail an evolution or revolution of Charter’s strategy, Winfrey indicated his approach will be closer to the former than the latter. That’s in part because he’s already played a key role in shaping Charter’s strategy over the past decade.

“Just because somebody gives you a new title doesn’t mean that your view on fundamentally how to create shareholder value changes overnight. I’m pretty committed to all the things that we’re doing today in terms of our strategy, products, pricing, package, service,” he said. “So, I don’t expect any seismic shifts.” That said, he noted Charter will seize on opportunities to accelerate what it’s already doing.

He added that unlike some rivals, Charter doesn’t “see any reason” to overbuild its network with fiber in order to effectively compete.

Winfrey stated Charter will hold an investor event in December to provide more detail on his vision for the company, including its roadmap for high-split network upgrades and DOCSIS 4.0 rollout.

His comments came as Charter reported Q3 results in which it beat expectations as well as wireline rivals with 75,000 broadband net additions. Consolidated revenue rose 3.1% year on year to $13.6 billion, though profit attributable to the operator remained flat at $1.2 billion. Broadband revenue specifically was up 3.9% to $5.6 billion.

Rural build costs

New Street Research noted the operator’s capital expenditures came in higher than expected at $2.4 billion. CFO Jessica Fischer said its spending included $525 million on rural broadband builds and $1.8 billion in core cable capex (which excludes its rural build and wireless), which rose year on year due to higher CPE and scalable infrastructure spending. She added it now expects to spend approximately $1.5 billion on its rural construction initiative and between $7.1 billion and $7.3 billion on core cable capex for the full year 2022.

Rutledge acknowledged inflationary pressure has caused cost issues for its broadband builds. But that’s been offset to an extent by greater-than-anticipated success in its rural initiative.

“We have had higher costs than we anticipated but we’ve also had more success than we anticipated in terms of both penetration and the number of passings that we can develop off of the RDOF projects that we’ve built. So net-net our cost is what we thought it would be on a per passing basis but it does create pressure and difficulty for people to attract labor and to get things done,” he said.

Fischer noted that Charter has done extensive prep work in 2022 to accelerate its rural builds next year. But that said, she added the rural builds aren’t the only contributor to net additions. Growth is also coming from expansions of its legacy network as well, she said.