Inside Charter’s Buyback Program
CHTR’s 5.0% coupon notes
Charter Communications (CHTR) lately raised new capital by offering more debt, as the company is seeking more cash to put toward general corporate purposes. In August 2017, the company announced that it would be selling notes worth $1.5 billion to qualified institutional buyers outside the US. These notes have an interest rate of 5.0% and will mature in 2028.
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Charter’s buyback program
Charter said it planned to utilize the proceeds from the debt offering toward general corporate purposes, such as buying back its own shares. In 2Q17, the company repurchased shares worth $3.7 billion. Since the beginning of 2017, Charter has spent $4.5 billion on buybacks as of the end of 2Q17.
Buybacks have numerous potential impacts on a stock, including improvements in EPS (earnings per share) and softening the effects of stock dilution.
Meanwhile, Charter’s debt level has been mounting. Charter had ~$61.8 billion in total principal debt at the end of 2Q17, partly due to debts from acquisitions.
In 2016, Charter acquired Bright House Networks and Time Warner Cable, and these assets have helped the company strengthen its cable television business profile.
As depicted in the chart above, Charter derives its major revenues from its video division, but the company is witnessing intense competition in the US cable TV market from Comcast (CMCSA), Walt Disney (DIS), and AT&T (T).