29 Mar

Inside Charter Communications’s Free Cash Flow and Capex Plans

WRITTEN BY Ambrish Shah

Charter’s capex

Telecommunication services is a highly competitive industry with multiple operators offering similar, if not the same, voice, data and video offerings. Given the limited opportunities to expand organic margins, an emphasis on strategic services, product innovation, and expansion may require increased capital expenditure (capex).

In this article, we’ll take a closer look at Charter Communications’s (CHTR) investment in capex to improve its network.

Inside Charter Communications’s Free Cash Flow and Capex Plans

In 4Q16, Charter Communications (CHTR) spent ~$1.9 billion on capex, with $187 million tagged for transition-related expenses. The Time Warner Cable and Bright House Networks acquisitions added significant scale to Charter Communications.

CHTR’s management cautioned that upgrading the Time Warner Cable and Bright House Networks systems to all-digital, as well as integrating the acquired and legacy systems, could take several years. The integration could also entail significant capex and higher operating costs.

Expected peer capex investments in 2017

Charter Communications didn’t provide any capex guidance for 2017. However, the company expects its capex to ramp up going forward as it restarts its all-digital projects across the remaining Time Warner Cable and Bright House Networks markets.

In 2017, CenturyLink (CTL) expects its capex to be ~$2.6 billion. Frontier Communications (FTR) and Windstream Holdings (WIN) are expected to spend ~$1.3 billion and ~$0.8 billion, respectively, on capex in 2017. AT&T (T) and Verizon (VZ), the integrated US telecom players, expect to spend ~$22 billion and $16.8 billion–$17.5 billion, respectively, on capex in 2017.

In 4Q16, Charter Communications reported free cash flow of $1.9 billion, compared with $0.1 billion in 4Q15.

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In 2017, CenturyLink (CTL) expects its capex to be ~$2.6 billion. Frontier Communications (FTR) and Windstream Holdings (WIN) are expected to spend ~$1.3 billion and ~$0.8 billion, respectively, on capex in 2017.

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In 2017, CenturyLink (CTL) expects its capex to be ~$2.6 billion. Frontier Communications (FTR) and Windstream Holdings (WIN) are expected to spend ~$1.3 billion and ~$0.8 billion, respectively, on capex in 2017.

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