Charter Communications shed about 36,000 residential video customers in the fourth quarter, compared to a gain of 2,000 residential video subscribers in the prior year, but revenue increased nearly 6% and cash flow was up nearly 5%, beating most analysts’ estimates.
Revenue in the period was $11.2 billion, up 5.9% and driven mainly by a gains of 289,000 high-speed internet customers in the period, up from a gain of 263,000 in Q4 2017. Cash flow at $4.2 billion was up 4.6% in the quarter. Excluding revenue and operating costs from its mobile unit, cash flow would have risen by 7.6%, the company said.
Charter launched its mobile service, Spectrum Mobile, in September and said it added 113,000 mobile lines in Q4.As of the end of 2018, Spectrum Mobile served a total of 134,000 mobile lines.
For the full year, revenue rose 4.9% to $46.3 billion and cash flow was up 5% to $16.3 billion. Excluding mobile revenue and expenses, cash flow would have increased 6.5% for the full year.
Charter said its all-digital and DOCSIS 3.1 build outs were completed at the end of the year. In addition, all of Charter’s markets now have access to Spectrum Internet Gig, the company’s 1 Gigabit per second data service.
In a statement, Charter chairman and CEO Tom Rutledge said the company was pleased with its financial performance, especially since it has completed “what we believe is the largest cable integration ever. In 2019, we expect the operating and cash flow performance of our cable business will further demonstrate the superiority of our network, the returns of our recent investments, and the long-term value creation driven by our consumer-focused operating strategy."
Evercore ISI media analyst Vijay Jayant said the results point to his belief that Charter, his top pick in the sector this year, is at an inflection point. With capex falling precipitously after completion of its all-digital and DOCSIS 3.1 intiatives-- he said in a research note that Charter's cap ex guidance was $600 million lower than his estimates -- the cable operator is poised for growth.
"These results and guidance support our thesis that the business is at an inflection point, with the drag of the TWC/Bright House integration coming to an end, allowing the benefits to flow through the business and to cash flow," Jayant wrote.