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Behind Charter’s Big Long-Term Growth Drivers

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Part 3
Behind Charter’s Big Long-Term Growth Drivers PART 3 OF 7

What Charter’s EBITDA Margin Trend Indicates

Charter’s EBITDA margin trend

In 2Q17, the growth in Charter Communications’ (CHTR) core operating profitability showed strength. The company’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) reached $3.8 billion in 2Q17, compared with $3.5 billion in 2Q16.

In 2Q17, Charter’s adjusted EBITDA grew ~8.7% YoY (year-over-year), excluding transition costs. Charter’s adjusted EBITDA margin was 37.1% in 2Q17, up from 35.5% in 2Q16. This increase in its adjusted EBITDA margin was primarily due to non-programming cost reductions as its integration synergies and efficiencies begin to be realized.

What Charter’s EBITDA Margin Trend Indicates

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Peer EBITDA margins

By comparison, according to company filings for 2Q17, integrated US telecom behemoth Verizon Communications (VZ) saw a consolidated adjusted EBITDA margin of 37.2%. Meanwhile, AT&T’s (T) combined domestic wireless operations saw an EBITDA margin of 41.8% in 2Q17, and Frontier Communications’ (FTR) adjusted EBITDA margin came in at 39.3%.

Charter’s management anticipates that its adjusted EBITDA will expand going forward, reflecting its solid cost management, which includes the company’s improved outlook for merger synergies.

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