How Charter Expects to Continue Its Margin Expansion



Charter’s adjusted EBITDA margin

Charter Communications (CHTR) is witnessing ongoing growth in its core operating profitability, primarily to reflect strong cost management. Charter Communications’ adjusted EBITDA rose ~6.5% YoY (year-over-year) on a pro forma basis to reach $3.9 billion in the first quarter. 

Excluding mobile costs, the company’s adjusted EBITDA rose ~6.8% YoY in the first quarter. Its adjusted EBITDA margin rose from 35.9% in the first quarter of 2017 to 36.5% in the first quarter.

According to Tom Rutledge, the CEO of Charter Communications, “Margins will improve. Capital will come down dramatically. So even with relatively mild revenue growth, which in our case we try to drive entirely by customer creation, not rate, because we’re trying to use a market share strategy and get the benefit of this value proposition for the consumer. So yes, margins go up, all other things being equal.”

Charter’s peer comparison of EBITDA margin

In the first quarter, the integrated US (SPY) telecom giant Verizon (VZ) posted a consolidated adjusted EBITDA margin of 37.1%. AT&T (T) posted a combined domestic wireless operations EBITDA margin of 41.8% during the quarter. Frontier Communications’ (FTR) adjusted EBITDA margin was 41.3% in the first quarter.

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