A Look at Charter Communications’s Recent EBITDA Margin



Charter’s EBITDA margin

In the previous article, we discussed Charter Communications’s (CHTR) revenue trend over the last few quarters. In this article, we’ll take a look at CHTR’s EBITDA[1. earnings before interest, tax, depreciation, and amortization] margin. The growth trend in the company’s core operating profitability further strengthened during 4Q16.

Charter Communications posted adjusted EBITDA of $3.9 billion in 4Q16 compared to $3.4 billion in 4Q15. The company’s adjusted EBITDA margin was 37.5% in 4Q16, up from 35.7% in 4Q15. This increase was attributable to the operating momentum at legacy Charter, as well as a realization of ~$150 million in deal synergies.

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During Charter Communications’s 4Q16 earnings conference call on February 16, 2017, the company’s CFO, Christopher Winfrey, stated, “In 2016 in other words from May, we realized over $300 million in hard synergies. We continue to expect over $700 million in run rate transaction synergies at the first anniversary of the closing of our transactions. And I believe we’ll exceed $1 billion in synergies after three years from close.”

CHTR’s peer comparison of EBITDA margin in 4Q16

According to company filings, AT&T (T) and Verizon (VZ) had adjusted EBITDA margins of 35.7% and 35.5%, respectively, in 4Q16. AT&T is enjoying higher margins than Verizon due to cost synergies associated with its DIRECTV acquisition. Also, Frontier Communications’s (FTR) adjusted EBITDA margin was 40.0% in 4Q16.

Charter Communications expects its EBITDA to increase going forward, primarily to reflect solid cost management and the company’s improved outlook for merger synergies.


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