Add Charter to the list of service providers that are racking up substantial broadband subscriber gains in their recent earnings reports.
While some of that growth by Charter, AT&T, Verizon and Comcast is attributable to new subscribers related to the Covid-19 pandemic, there's something bigger afoot, according to Charter CFO Chris Winfrey. During the Q&A of Friday's earnings call, Winfrey was asked if he thought broadband subscriber adds would be below average next year due to the mass influx this year.
"Indeed, the industry has grown at a faster pace, and we've taken in a higher amount of share across all areas of our footprint and infrastructures," Winfrey said. "Where you're seeing that come from is broadband 'nevers," and also the acceleration of mobile only, in addition to the significant share shift that we're seeing as cable generally.
"Whether that's a pull forward or not (for next year), I don't know, but it doesn't go backwards. I think the need for the product is there. I don't think it goes away. I think it's a permanent either shift or trend of reducing the mobile only and requiring more broadband in the household."
In the third quarter, Winfrey said Charter was seeing the broadband market move towards more normal transaction activity in both churn and sales, which he expects to be reflected in the fourth quarter as well.
For the quarter, added 537,000 residential and small business internet customers versus 380,000 in the prior year quarter. In the past 12 months, Charter has added 2.3 million internet customers and 2 million overall customer relationships.
In its second quarter, Charter's added 850,000 residential and small business internet subscribers compared to 258,000 during the second quarter of 2019.
In Thursday's Q3 earnings, Comcast posted the best broadband quarterly results in its history by adding more than 633,000 residential and business subscribers. Over the past nine months, Comcast has added more broadband subscribers than it did in all of last year.
Charter CEO Tom Rutledge said the cable operator's self-installation program accounted for over 80% of its installations during the third quarter. Rutledge said residential data usage for internet-only customers remained at an elevated 600 gigabytes per month during the third quarter.
"We are growing well and gaining share against all our competitors in all of our markets regardless of competitive infrastructure," Rutledge said. "To maintain that growth we'll continue to invest in our network so that we can continue to offer new and better products than our competitors.
"In the coming years, we expect data usage per customer to continue to grow, and we're prepared to deliver more throughput across our network. The growth of demand for data is and will be driven by a number of factors including the growth of IP video services, including video conferencing and gaming."
Rutledge said Charter was continuously increasing the capacity in its core and hubs and augmenting its network to improve speeds and performance. In the near term, Rutledge said the deployed DOCSIS 3.1 gear still has a lot of runway left, along with additional bandwidth tools, to improve throughput and latency.
The roadmap also includes the conversion of the distribution network to DOCSIS 3.1 for all of Charter's products, including video broadband and telephony.
"By allocating more plant spectrum to the DOCSIS 3.1 IP services, we have the ability to offer symmetrical gigabit plus speeds," Rutledge said. "We'll also continue to invest in DOCSIS 4.0 with key vendors and the rest of the industry, bringing greater capacity and functionality.
"The DOCSIS 4.0 specification allows for multiple paths to reach 10 gig and higher speeds including full duplex DOCSIS and extended spectrum DOCSIS. Both 3.1 and 4.0 DOCSIS can be deployed in an economically efficient way as the market dictates. Our network evolution strategy allows us to offer superior conductivity products to meet changing consumer demand and extend our growth strategy and drive free cash flow."
Charter's Q3 numbers
Charter's third-quarter earnings reached $814 million compared to $387 million in the same quarter a year ago. Adjusted earnings before interest, taxes, depreciation and amortization, rose 13.6% to $4.6 billion. Charter's quarterly revenue increased by 5.1% to $12.0 billion in the quarter.
Charter also announced it has set aside $218 million in credits to reimburse sports-network subscribers for canceled games during the pandemic. Charter's residential revenue totaled $9.4 billion in the third quarter, an increase of 4.0% year-over-year.
Charter added 363,000 mobile lines in Q3, up from 276,000 during the year-ago period. As of Sept. 30, it served a total of 2.1 million mobile lines. Charter also added 67,000 residential and business video customers in the third quarter.