Charter's Rutledge: We're very bullish on the enterprise market opportunity

Charter Communications sees an opportunity to grow its presence in the competitive business services market, one where it will enhance its standing upon completing its pending acquisitions of Bright House Communications and Time Warner Cable (NYSE: TWC).

Speaking to investors during the third-quarter earnings call, Tom Rutledge, CEO of Charter said that the company will continue to expand its network footprint to serve more businesses.

"We're very bullish on the future of enterprise and we think what's going on today is a repositioning in the marketplace," Rutledge said.

Rutledge said that since their penetration into large businesses today is still low, he sees the potential to extend services into new markets and grow overall business services market share. 

"Our penetration at the enterprise level is less than 10 percent so there's a tremendous upside and a tremendous upside to expand our footprint there which is not fully expanded," Rutledge said. "We committed as part of this acquisition to extend the footprint of our serviceable enterprise area and as a result we can grow the business, improve the products, and create new products that don't exist today."

The commercial segment was a star in Charter Communications' third-quarter revenue mix. Commercial business segment revenues rose 13.2 percent year-over-year to $286 million due to higher sales small to medium business customers (SMBs) and wholesale service provider customer sales.

Following the loss of 5,000 customers in the same period a year ago, the third quarter 2015 was a comeback period for Charter's commercial unit.

After launching its Spectrum Business pricing and packaging for the SMB segment in March, the cable MSO grew commercial customer relationships by 17,000 during the quarter. This figure included 4,000 net commercial video customer additions.

The service provider said that its Spectrum Business plans are focused on providing "better products and greater value to small and medium business customers."

While Charter has trailed fellow cable MSOs such as Comcast and Time Warner Cable -- two MSOs that began offering business services before Charter -- the company's pending acquisitions of Time Warner Cable and Bright House could potentially accelerate its profile in the business services market, particularly for Ethernet.

According to Vertical Systems Group, if Charter is successful in purchasing Bright House and Time Warner Cable, it could enhance its standing in the competitive Ethernet market much like Level 3 Communications did when it acquired tw telecom.

From all accounts it appears that Charter is motivated to enhance its standing in the business services arena. When it initially announced its acquisitions of Charter CEO Tom Rutledge said that they plan to expand their existing fiber footprint to pursue more medium and larger business accounts.

At that time Rutledge said that it would "invest significantly in building out our optical network beyond our existing footprint to inject much needed competition in the commercial markets." 

Due to the uptick in commercial and residential customer growth, Charter's total third-quarter revenues were $2.5 billion, up 7.2 percent as compared to the prior-year period. It reported third-quarter net income of $54 million, following loss in the same period a year earlier. On a per-share basis, the company had a profit of 48 cents.

For more:
- see the earnings release
- listen to the earnings call (reg. req.)

Related articles:
Charter's TWC deal faces 1 Gig requirement from New York regulators
Charter's Bright House deal could further disrupt competition in the Ethernet, business services market
VSG: Charter's pending TWC deal could shake up Ethernet services market
VSG: Fiber penetration gap in U.S. businesses narrowed to under 60%

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