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Behind Charter’s Capital Expenditure Avenues in 4Q17


Feb. 16 2018, Updated 7:34 a.m. ET

Charter’s capital spending in 4Q17

Charter Communications (CHTR) has been consistently relying on capital expenditures to improve its network. During its 4Q17 conference call, Charter Communications reported that it had spent $2.6 billion on capital expenditures, including $202.0 million on transition-related expenses.

However, Wall Street analysts had expected Charter’s capital spending to reach ~$2.4 billion in 4Q17. The company spent $1.9 billion on capex in 4Q16, including $187.0 million on transition-related expenses.

Excluding transition-related expenses, Charter’s capital expenditure in 4Q17 reached $2.4 billion, compared with $1.7 billion during 4Q16. In fiscal 2017, its total capital spending was $8.2 billion, excluding transition capital.

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Increasing spending on CPE

This growth in capital expenditure has been mostly due to higher spending on CPE (customer-premise equipment), scalable infrastructure, and support capital. The increase in spending on CPE was driven by the launch of its spectrum pricing and packaging in the legacy Time Warner Cable and legacy Bright House markets.

Charter expects to continue to invest capital in its all-digital projects, and so the company plans increased spending in the remaining Bright House and Time Warner Cable markets that are not yet all-digital.

Capital spending of peers

By comparison, Verizon Communications (VZ) reported capital expenditures of $17.2 billion for fiscal 2017 and expects its capital spending to be in the range of $17.0 billion–$17.8 billion for 2018, which will focus on the commercial launch of 5G. T-Mobile (TMUS) also expects to invest in 5G deployment and expects its capital spending to reach $4.9 billion–$5.3 billion in 2018.

AT&T (T), on the other hand, invested $21.6 billion in capital projects in 2017. The company expects around $25 billion in capital expenditures in 2018, which includes $23 billion net of expected FirstNet reimbursements and $1 billion of incremental tax reform investments. 

By comparison, for its fiscal 4Q17, Sprint (S) expects its cash capital expenditure to be at the lower end of its previous expectation of $3.5 billion–$4 billion.

In the next part, we’ll move on to Sprint’s latest results.


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