Charter numbers flatter over tax changes, but hard work ahead

The first set of combined Charter figures are out, although they show little about how the business will look going forwards, with major adjustments in taxation and pensions freeing up both cash and profit for the year, and making this look like Charter has already turned around Time Warner Cable.

But this is just the honeymoon, and the hard work converting some 40% of
Time Warner Cable’s footprint and 60% Bright House’s to all digital cable networks, is still to come. The company said it will achieve this in two years, which will throw a massive capex upgrade at the problem, but the repayment will be the ability to offer more modern video and broadband services, and faster broadband speeds.

Charter is promising every one of the 49.2 million homes it passes broadband speeds of 60 Mbps available in that time frame. Charter is already 100% digital in its own legacy network, and said that while video losses of 51,000 were experienced in the final quarter of 2016, against a gain last year of 118,000 this was driven primarily by losses at TWC. Charter in fact added 42,000 in the past 12 months, so that suggests that TWC and Bright House lost 160,000 in total.

Charter completed 2016 with 16.8 million residential video customers and said that 90% of its old legacy Charter customers subscribed to broadband tiers of 60 Mbps or more, compared to 36% at TWC and 71% at Bright House.

Revenue for the year rose just 2% to $16.4 billion, and net income was up to $1 billion compared to just $159 million last year on a pro forma basis. For the quarter, as we said, tax and pension changes meant old Charter registered net income of $3.5 billion compared to a loss last year of $271 million.

In short, there was a lot of financial tidying up done as the three companies merged, and some marginal improvement, but the real proof will be in a few quarters when we can see how the new team shapes up to the challenge of merging so many staff, and so many customers onto a single set of offerings.