Charter Communications reported a $2.4 billion loss attributable to shareholders for the third quarter, primarily reflecting a $6.3 billion impairment of franchise assets. The results released on 6 November also show continuing losses of broadband customers, even as the mobile business adds lines.
Reported revenue rose 9.1% to $14.9 billion, largely because of the Cox transaction. That increase does not mean the combined business grew at the same rate on a comparable basis: pro forma revenue was $16.5 billion, down 1.5%.
The distinction matters because acquisitions change the size of the business being measured. Reported figures follow the actual consolidation period, while pro forma comparisons present the businesses together on a comparable basis.
Broadband falls, mobile grows
On that pro forma basis, internet customers declined by 233,000 during the quarter to 34.3 million. The decline comprised 156,000 at legacy Charter and 77,000 at Cox.
Mobile moved in the opposite direction, adding 508,000 lines to reach 13.5 million. Video customers fell by 77,000 to 13.8 million. Those contrasting trends show why growth in mobile connections does not by itself resolve pressure on the broadband and television base.
The impairment is an accounting reduction in the value of franchise assets. It is not equivalent to $6.3 billion of cash leaving the business during the quarter. Actual operating cash flow was $4.0 billion and free cash flow was $674 million.
For the combined group, the challenge is to convert the larger footprint into stronger operating performance. The quarter's headline revenue growth needs to be read alongside the comparable decline and the continued loss of internet customers.
