Charter’s Increasing Cable Competition



Charter’s earnings in 3Q16

Charter Communications (CHTR) is a provider of cable services in the US, offering a variety of entertainment and communications solutions to residential and commercial customers. In 2016, Charter completed its merger with Time Warner Cable and Bright House Networks. With this merger, the new Charter Communications is the second-largest US cable player after Comcast (CMCSA).

Charter reported strong 3Q16 results, with overall video and broadband additions coming in better than expected due to better overall performance in the acquired markets. In 3Q16, the telecom player beat Wall Street analysts’ earnings expectations by ~9.5%. The company reported EPS (earnings per share) of $0.69 in 3Q16, which was higher than its $0.01 in 3Q15 on a pro forma basis.

Charter’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) was $3.6 billion in 3Q16 as compared to $3.2 billion in 3Q15. Its adjusted EBITDA margin rose to 36.2% in 3Q16 from 34.0% in 3Q15.

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Charter faces increasingly intense competition in the cable industry, with satellite broadcasters DIRECTV and Dish TV (DISH) being the greatest current threats. DIRECTV was acquired by AT&T (T) in July 2015, making it the largest pay-TV player in the US.

AT&T and Verizon Communications (VZ) are also ramping up comparable service offerings, including video, high-speed Internet, and digital phone and are combining them with wireless services that further intensify competition in the cable market. Bundling various services helps these companies reduce the churn of customers.

In the next part of this series, we’ll look at the revenue growth from Charter in 3Q16.


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