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What’s New Charter’s Internet Value Proposition?

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Jun. 2 2015, Updated 9:06 a.m. ET

Competitive landscape in the Internet segment

Earlier in this series, we learned about the proposed merger of Charter (CHTR), Time Warner Cable (TWC), and Bright House. The merger was announced on May 26, 2015. We also learned that the proposed merged company—New Charter—will benefit from the scale of cable operations in the US. In this part of the series, we’ll look at the dynamics of New Charter’s Internet segment.

As you can see in the above chart, New Charter will have the second largest Internet subscriber base in the US. These Internet subscriber figures are for the end of 2014. In terms of Internet subscribers, Comcast (CMCSA) was still the market leader with 22 million subscribers at the end of 2014.

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AT&T (T) was third. It had the largest US wireline telecommunications operations. AT&T had 16 million Internet subscribers in 2014. After the Charter, Time Warner Cable, and Bright House merger, Verizon (VZ) will have the fourth largest US Internet subscriber base. Verizon had 9.2 million Internet subscribers at the end of 2014.

New Charter’s Internet speeds

Based on the Netflix ISP Speed Index, the three companies in the proposed New Charter had one of the fastest Internet speeds in the US as of April 2015. We took primetime speeds experienced by Netflix users as a proxy to ISPs’ Internet speeds.

Among the large ISPs, Bright House was fourth with an average Internet speed of 3.46 Mbps (Megabits per second) in April 2015. Charter was sixth with a mean speed of 3.34 Mbps during the month. Time Warner Cable was ranked seventh with an average Internet speed of 3.29 Mbps in April 2015.

If you want to get diversified exposure to Time Warner Cable, you could invest in the iShares Core S&P 500 ETF (IVV). IVV held ~0.2% in Time Warner Cable on April 30, 2015.

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