Charter Communications Inc. CHTR reported disappointing first-quarter 2015 financial results. The company suffered loss in the reported quarter in contrast to the Zacks Consensus Estimate of net income. The top line also failed to meet the same. Charter Communications currently carries a Zacks Rank #3 (Hold).
GAAP net loss in the reported quarter stood at $81 million or 73 cents per share compared with a net loss of $37 million or 35 cents per share in the year-ago quarter. Quarterly, loss per share of 73 cents was in contrast to the Zacks Consensus Estimate of an income of 7 cents per share.
First-quarter total revenue of $2,362 million was up 7.3% year over year but missed the Zacks Consensus Estimate of $2,375 million. Segment wise, Video revenues totaled $1,129 million, up 3.5% year over year. Internet revenues came in at $717 million, up 16.4% from the prior-year quarter.
Voice revenues stood at $134 million, down 10.2% while Commercial revenues reached $269 million, up 14.8% year over year. Advertising revenues were $66 million, down 2% year over year. Other revenues came in at $47 million, up 5.9%.
Quarterly operating costs were $1,562 million compared with $1,435 million in the year-ago quarter. First-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $800 million compared with $767 million in the year-ago quarter. EBITDA margin came in at 33.9% against 34.8% in the prior-year quarter.
During the first quarter of 2015, Charter Communications generated $528 million of cash from operations compared with $577 million in the same quarter a year ago. Free cash flow in the reported quarter was $101 million against $74 million in the year-ago quarter.
At the end of the quarter under review, Charter Communications had $20 million of cash and cash equivalents and $20,964 million of outstanding debt compared with $3 million of cash and cash equivalents and $21,023 million of outstanding debt at the end of 2014. The debt-to-capitalization ratio at the end of the first quarter was 0.99 flat sequentially.
Subscriber Statistics
Residential segment: As of Mar 31, 2015, Charter Communications had 4.153 million video, 4.891 million high-speed Internet and 2.481 million voice customers. During the reported quarter, the company gained 125,000 high-speed Internet and 42,000 voice customers but lost 7,000 video subscribers.
Average revenue per customer relationship was $111.25 compared with $110.29 in the prior-year quarter. Single Play penetration was 38.3%, Double Play penetration stood at 28.9%, Triple Play penetration was 32.8% and Digital penetration was 98.5%.
Commercial Segment: As of Mar 31, 2015, Charter Communications had 135,000 video, 317,000 high-speed Internet and 188,000 voice subscribers. During the reported quarter, the company added 2,000 video customers, 11,000 high-speed Internet and 8,000 voice customers.
Latest Development
Charter Communications is again exploring ways of bidding for Time Warner Cable Inc. TWC, the second largest cable TV operator in the U.S. Recently, Comcast Corp. CMCSA abandoned its 14-month old $45.2 billion mega takeover deal concerning Time Warner Cable owing to strong reservations expressed by the Federal Communications Commission (FCC) and the Department of Justice.
In this context it is worth noting that Charter Communications had initially expressed its desire to acquire Time Warner Cable and had placed the bid for the same but lost to Comcast’s higher bid.
The combined entity of Charter Communications – Time Warner Cable will become the third largest pay-TV operator in the U.S. after Comcast and DIRECTV, which is also awaiting a regulatory approval for its acquisition by AT&T Inc. T.
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