Charter: Fixed Wireless Competition and Fiber Overbuilding to Ease
Charter Communications sees broadband subscriber competition from fixed wireless access (FWA) having peaked and predicts that fiber overbuilding will slow down. In a call with analysts Friday as Charter reported its Q4 2024 results, CEO Chris Winfrey said the broadband environment is "still competitive in terms of fiber and cellphone internet overlap." But, he said, "we better be better this year than we were ... last year" -- especially with the loss of the Affordable Connectivity Program (ACP) no longer dragging down results, as it did in the second half of 2024. Charter executives used the term "cellphone internet" five times in Friday's call.
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Charter said it ended Q4 with 28 million residential internet subscribers, down from 28.5 million in Q4 2023, and 12.3 million residential video customers, down from 13.5 million. Its 9.6 million mobile lines at 2024's end were up from 7.5 million at the end of 2023.
CFO Jessica Fischer said Charter has "a lower appetite" to bid on BEAD projects due to regulatory conditions. She said the company ended 2024 with 813,000 rural passings -- up nearly 400,000 over the year, adding that it expects to do 450,000 more subsidized rural passings this year.
Fischer said hurricanes Helene and Milton, which hit in September and October, resulted in an additional 20,000 customer disconnects, and Q1 results will include some customer losses related to the California fires. She said 140,000 internet subscriber losses in Q4 were due to ACP's end and the resulting nonpay disconnects, as well as some churn.
Charter has also launched 2/1 Gbps service in Cincinnati and Lexington, Kentucky, with plans to expand it to additional markets later this year, Fischer said.
Charter stock partially rebounded Friday after a dip Thursday when Comcast reported worse-than-expected Q4 broadband results (see 2501300031). Charter closed at $345.49, up $8.87.
About 87% of Charter's mobile traffic is carried on its own wireless network, including thousands of citizens broadband radio service (CBRS) radios, Winfrey said, adding that the company will deploy 1,000 more this year in various markets. He said that 87% offload "is going to increase" due to CBRS deployment and cooperation among regional cable operators.
Winfrey said the 123,000 video subscribers lost in Q4 were an improvement as the company started bundling video with connectivity again after years of separating the two.
Asked about the likelihood of mergers and acquisitions, Winfrey said there's speculation about a Charter deal (see 2501300050), but "it's not the core" of Charter's strategy "and it's not the only way that we can create value."
MoffettNathanson's Craig Moffett wrote Friday that 2026 should see Charter's capital spending turn a corner and start to decline. He said next year will see it passing the peak of spending on its network upgrades, while its rural deployment opportunity fund work should start slowing.
LightShed Management wrote last week that Charter's practice of offering free mobile lines and converting them to paying subscribers after that initial free year has been a success, but it might be tough for Comcast -- which is leaning more heavily on wireless in the face of home internet competition -- to replicate. The free wireless lines strategy could put greater competitive pressure on Verizon and AT&T, it said.