Atlantic Equities - Charter Communications Inc. Class A (CHTR) Q2 shows solid improvement post weak Q1

Report

Atlantic Equities

Hamilton Faber

Q2 shows solid improvement post weak Q1

A stark improvement in results from Q1 with a modest deterioration in broadband adds YoY to 218k, much better than the 185k forecast. Meanwhile video losses were also better at -73k (cons. -108k). Overall revenue was in line at 5% growth with EBITDA 1% ahead at 5% growth. Capex was slightly higher than our 19% forecast at 22% of revenues; this seems to be partially timing but also HSD speed increases. The company repurchased $1.9bn of stock during the quarter. Charter also restated some subscriber counts this month for the acquired systems and this is reflected in our analysis. Overall, it seems that Charter's billing integration issue is fading and management confidence is clearly good given the buy back.

31/07/2018 3 EN

Underlying

Charter Communications Inc. Class A

Charter Communications is a holding company. Through its subsidiaries, the company is a cable operator and a broadband communications company providing video, Internet and voice services. The company also provides its mobile service to residential customers. In addition, the company sells video and online advertising inventory to local, regional and national advertising customers and communications and managed solutions to enterprise customers. The company also owns and operates regional sports networks and local sports, news and community channels. The company owns and operates a two-way telecommunications network which passes various households and small and medium businesses across United States.

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US16119P1084 NASDAQ Stock Market United States

Provider

Atlantic Equities

Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.

Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.

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Analysts

Hamilton Faber

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CHTR: Buy It Now

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CHTR: Not all doom & gloom after all

We shared our view of Charter’s results this morning. Subscriber and EBITDA results were better than expected. In this note following the earnings call and our follow-up conversations, we address the following key investor issues including 1) broadband subscriber trends; 2) price increases and broadband ARPU; 3) EBITDA growth; 4) amended MVNO agreement; and 5) Leverage.

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Model update

This report contains forecasts updated for reported Q218 results. Neither our financial nor PSU estimates are materially changed and we remain Overweight with a 12m PT of $365.

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