Charter’s CEO says converged mobile and wireline services reduce internet churn

Scaling mobile

With mobile being the centerpiece of its convergence strategy, the subscriber base continues to grow. During the third quarter, Charter added 493,000 lines, with higher gross additions year over year, which were offset by higher disconnects on a larger base.

Spectrum Mobile is available to all new and existing broadband customers. The cable MSO has capitalized on the offer plans that include 5G access, do not require contracts, and include taxes and fees in the price. 

“In the third quarter, we remained the fastest-growing mobile provider in the United States,” Winfrey said. “We added nearly 500,000 spectrum mobile lines in the quarter and 2 million lines over the last 12 months, over 20% growth.”

As it expands its mobile reach, the service provider has been implementing new methods to backhaul mobile traffic. Over the past three years, Charter has reduced its reliance on macro cell towers by 20%.

“We are growing offload to faster networks, driven by the development of our Spectrum Mobile network with seamless authentication to nearly 50 million small cell towers through our advanced Wi-Fi, CBRS deployment, and partner cable networks,” Winfrey said. “With 88% of spectrum mobile device traffic now on our own network, the cable operators deliver more facilities-based traffic than the traditional mobile carriers.”

Winfrey added that “Wi-Fi is the backbone for all cellular traffic, and 5G macro cell towers are our backup radios with lower speed and higher latency.”

Broadband competitive challenges

While Charter is moving fast on its converged mobile and internet opportunity, the cable MSO continued to weather broadband headwinds in the third quarter, losing 109,000 customers.

However, the loss of broadband customers was lower after adjusting to the impact of last year's ACP-related disconnects.

Winfrey noted that the challenge for Charter’s broadband base is not just churn but also the impact of fiber and fixed wireless access (FWA) competitors, as well as macroeconomic headwinds.

“The challenge that we're facing right now isn't so much on the turnoff side, although I think there's a real opportunity where that will just continue to get better,” he said. “The challenge we have is that the operating environment remains competitive with new competitors and a macro environment that hasn't gotten better.”

Winfrey noted a slower housing market. “We have a muted housing environment, there's slow household formation and low move rates,” he said.

He added that it is seeing more “continued mobile substitution growth and more footprint expansion from cellphone Internet, particularly from AT&T.”

While Charter maintains that its penetration in fiber-competitive markets remains higher than its competitors, the entry of new wireless or fiber competitors in its markets has a short-term impact on its gross broadband subscriber adds.

Winfrey said that while in the first and second quarters, “gross adds were higher year-over-year, but in the third quarter were lower year-over-year.”

“The impact [in gross adds] was most pronounced in the low-income segment,” he said. “I'm not sure if somebody is targeting it or not, but it was pretty notable for us, and it's still very much an essential segment for us as well.”

Internet, mobile lead Q3 revenue

During the third quarter, Charter’s revenue grew in internet and mobile, offset by declines in its video and voice segments.

Driven by promotional rate step-ups, rate adjustments, and a favorable change in bundled revenue allocation year-over-year, partly offset by a decline in Internet customers year-over-year, Internet revenue grew by 1.7% year-over-year to $6.0 billion.

Mobile remained a bright spot in Charter’s earnings mix, rising 19.2% year over year to $954 million, driven by mobile line growth, partly offset by a less favorable year-over-year bundled revenue allocation.

Video continued to face challenges in the third quarter, declining 9.3% to $3.4 billion, which the cable MSO attributed to a year-over-year decline in video customers.

Charter also saw softness in its voice segment. Due to a decline in wireline voice customers, partially offset by voice rate adjustments, third-quarter voice revenue declined 7.9% year over year to $332 million.

However, the service provider’s overall revenue declined. Driven by lower residential video and advertising sales revenues, third-quarter revenue dipped 0.9% year-over-year to $13.7 billion.

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