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Key Updates from Charter at Goldman Sachs's Communacopia

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Part 4
Key Updates from Charter at Goldman Sachs's Communacopia PART 4 OF 8

Why Charter Doesn’t Need to Be Part of More Integrated Company

Update on potential M&A

The telecommunication (or telecom) industry hasn’t seen a major deal announced since the AT&T (T)-Time Warner (TWX) and CenturyLink (CTL)-Level 3 merger agreements.

During the Goldman Sachs Communacopia Conference held on September 12, 2017, Tom Rutledge, Charter’s (CHTR) chief executive officer, was asked whether the company needs to be part of a more integrated company. Rutledge stated, “I don’t, I don’t think we need anything right now and we have, we are in the middle of the huge integration and a complex integration of very big assets and we are successfully executing against that and we have  great growth prospects in front of this.”

Why Charter Doesn&#8217;t Need to Be Part of More Integrated Company

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Charter’s revenue trend

In 2Q17, Charter’s revenue rose ~3.9% year-over-year (or YoY) on a pro forma basis to reach $10.4 billion. This increase in total revenues was in large part due to strong growth in the Internet and commercial components as the company integrates the Time Warner Cable and Bright House Networks acquisition.

Charter’s EBITDA margin trend

In 2Q17, Charter generated adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $3.8 billion compared to $3.5 billion in 2Q16. In 2Q17, adjusted EBITDA rose ~8.7% YoY, excluding transition costs. The company’s adjusted EBITDA margin was 37.1% in 2Q17, up from 35.5% in 2Q16. This expansion in adjusted EBITDA margin was mainly due to non-programming cost reductions as the integration synergies and efficiencies start to realize.

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