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Can Acquisitions of Charter’s Internet Customers Stay Solid in 1Q16?

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Charter’s Internet customer acquisitions in 1Q16

In the previous part of the series, we learned about the growth expectations for Charter Communications’ (CHTR) revenue in 1Q16, according to Wall Street analysts’ consensus. We also learned that earlier in 4Q15, the Internet component was one of the key growth drivers of the cable company’s revenue.

Now let’s look at expectations for growth momentum in Charter’s Internet customers in 1Q16. Wall Street expects the company’s net Internet additions to remain at stable levels year-over-year during the quarter.

As we can see in the above bar chart and according to the analyst consensus, the cable player’s net Internet additions are expected to be ~0.14 million in 1Q16. Earlier in 4Q15, this key customer metric was at ~0.13 million.

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Internet customer growth of some of the top cable players in 4Q15

During 4Q15, Charter’s Internet customers increased robustly by ~9.8% YoY to reach ~5.6 million. The cable player’s estimated Internet penetration increased YoY from ~40.7% in 4Q14 to ~44.5% in 4Q15, according to the company.

Now let’s take a look at the Internet customer growth dynamics of the top two cable players in the US. By the end of 4Q15, Comcast (CMCSK) (CMCSA) had ~23.3 million high-speed Internet customers. Year-over-year, these Internet customers increased by ~6.2%.

Meanwhile, the high-speed data customers of Time Warner Cable (TWC) rose robustly by ~8.7% YoY to reach ~13.3 million by the end of 2015.

For a diversified exposure to some of the largest cable companies in the US, you may consider investing in the iShares Core S&P 500 ETF (IVV). This ETF held a total of ~1.2% in Comcast (CMCSA), Time Warner Cable (TWC), and Cablevision (CVC) at the end of March 2016.

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