Charter's broadband subscriber adds were down in Q4 when compared to Q3, but the cable operator attributed that slowdown to its previous success.
For the quarter, Charter added 246,000 broadband subscribers, which includes residential and SBM customers. That was down by 93,000 when compared to the last year's fourth quarter and from the 537,000 net adds in the previous quarter.
On Friday's earnings call, Charter CEO Tom Rutledge attributed the slow down in Q4 broadband additions to how well the cable operator did in the previous three quarters. The first three quarters of last year were above the first three in 2019 by 900,000. Charter now has 28.9 million residential and SMB internet customers.
Overall, Charter served a total of 31.1 million residential and small and medium business customers, with 1.9 million customers added in 2020 compared to 1.1 million added in 2019. Charter added 197,000 total customer relationships in the fourth quarter, compared to 268,000 during the fourth quarter of 2019.
"For the full year, we grew our internet customers by 2.2 million or by 8.3%, our highest ever on an absolute basis," Rutledge said. "The significant creation of new broadband customers and shifts from competitors to Charter earlier in the year, plus lower market churn resulting in fewer selling opportunities, drove lower net ads in the fourth quarter when compared to last year.
"Our expectation and plan for 2021 is to revert to the trend we were on pre-Covid and meet or exceed the customer relationship and internet net ads that we achieved in 2019. We believe our long term broadband penetration and market position has actually been enhanced."
On Thursday, Comcast reported it had set several broadband records for the full year and fourth quarter of 2020 including the addition of 538,000 broadband subscribers in the fourth quarter and 2 million net broadband adds for the year.
By contrast, Charter executives maintained that the slowdown of net broadband adds in the fourth quarter was due, in part, to lower customer churn, which included subscribers that were brought on board by the FCC's Keep America Connected program. Most of those customers have transitioned into paying customers, according to Charter CFO Chris Winfrey.
Rutledge and Winfrey said the lower customer churn led to fewer sales opportunities for Charter in the fourth quarter. Rutledge said Charter expanded the delivery of its minimum speed offerings of 200 megabits from about 60% of its footprint to close to 75% of its footprint in the fourth quarter.
"In the near term, we have a large opportunity to improve data throughput and latency on our network by using our DOCSIS 3.1 technology, which still offers us a long runway to improve our product set," Rutledge said. "We'll also continue to invest in DOCSIS 4.0 with key vendors and the rest of the industry for even greater capacity and functionality down the road."
Rutledge said that since Charter closed its deals to buy Time Warner Cable and Bright House Networks in 2016, it has spent $35 billion on its network and infrastructure, which served it well during the increased capacity demands due to the pandemic last year.
Charter by the numbers
Charter posted net income of $1.2 billon, or $6.05 per share, which was an increase over $714 million, or $3.28 per share, in the same quarter a year ago. That exceeded expectations for earnings per share of $4.83, according to FactSet.
Charter generated revenue of $12.6 billion for the quarter, up from $11.7 billion a year earlier, which was largely in line with the FactSet consensus of analysts.