Understanding Charter’s EBITDA Growth despite Its Higher Expenses

Charter Communications (CHTR) reported adjusted EBITDA of $4.2 billion in the fourth quarter, up ~4.6% YoY (year-over-year) led by higher top line growth.

However, excluding mobile earnings, the telecommunications company’s adjusted EBITDA rose ~7.6% YoY in the fourth quarter. Its adjusted EBITDA margin contracted to 37.1% in the fourth quarter from 37.5% in the fourth quarter of 2017.

Charter has managed to increase its adjusted EBITDA despite its higher operating expenses. The company’s total operating expenses rose ~6.7% YoY to $7.1 billion in the fourth quarter mainly due to a rise in programming and non-programming costs and expenses. In the fourth quarter, Charter’s programming costs rose ~5.6% YoY to $2.8 billion. Its non-programming expenses, on the other hand, rose ~7.5% YoY to $4.3 billion.

In the fourth quarter, integrated US telecommunications behemoth Verizon (VZ) reported a consolidated adjusted EBITDA margin of 33.8%. AT&T (T) reported a combined domestic wireless operations EBITDA margin of 40.1%.