Q2 2016 – Charter Earnings Call Summary

Charter

Below are my key takeaways from the Charter Q2 2016 Earnings Call on Aug 9:

Summary:

CEO Tom Rutledge’s opening statement: “On May 18th we closed our transaction with Time Warner Cable and Bright House Networks creating a new company with a bigger and a significantly more concentrated footprint giving us the local and national scale to innovate and grow faster.  Our high capacity network now reaches nearly 49MM homes and business and we have over 25MM residential and business customers in attractive markets.”

Bought Time Warner Cable and Bright House Networks for approximately $67,000MM. The new company will have over 25MM customers in 41 states and be marketed under the Charter Spectrum brand name.  They will be the second-largest U.S. broadband provider and third-largest video provider.

Total Q2 revenue for the new company was $9,988MM, a 6.6% YoY increase.  Here’s a breakdown by segment:

Segment % of Total Rev
Video 41%
Internet 31%
Commercial 13%
Voice 7%
Ad Sales 4%
Other 2%
Total 100%

About 40% of Time Warner assets and 50% of Bright House assets are not all digital. Will hire 20,000 people to help integrate legacy systems which will take several years.  

Expect a $600MM run rate by the 1st anniversary of closing and $800MM by year three.  Aggregate debt is now just over $60,000MM at a 4.4x leverage ratio.  

Bright House footprint is mainly in Florida which means high seasonality in Q2.

US Footprint: Charter, Time Warner and Bright House

Charter - US Footprint

Charter - Regional Footprint

 

Financial Metrics:

Pro Forma Rev (In millions) Q2 2016 Q2 2015 % Diff
Video  $4,143  $4,074 1.7%
Internet  $3,132  $2,797 12.0%
Voice  $730  $706 3.4%
Commercial  $1,345  $1,186 13.4%
Ad Sales  $405  $390 3.8%
Other  $233  $217 7.4%
Total  $9,988  $9,370 6.6%

 

Subscriber Metrics:

Video (In thousands) Q2 2016 Q2 2015 % Diff
Time Warner  10,769  10,774 0.0%
Charter  4,325  4,282 1.0%
Bright House  1,840  1,908 -3.6%
Total  16,934  16,964 -0.2%

 

Internet (In thousands) Q2 2016 Q2 2015 % Diff
Time Warner  13,172  12,162 8.3%
Charter  5,458  4,982 9.6%
Bright House  2,037  1,903 7.0%
Total  20,667  19,047 8.5%

 

Voice (In thousands) Q2 2016 Q2 2015 % Diff
Time Warner  6,618  5,856 13.0%
Charter  2,652  2,514 5.5%
Bright House  985  1,029 -4.3%
Total  10,255  9,399 9.1%

 

List of Key Properties:

Forward Thinking:

  • Convert Legacy TWC and Bright House customers into Charter Spectrum customers

Links to Company Website:

Please comment below if there are data points from Charter you’d like me to include in their next Earnings Call Summary.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s