Stamford, Connecticut - July 30, 2021 - Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and six months ended June 30, 2021.
Second quarter total residential and small and medium business ("SMB") customer relationships increased by 332,000. As of June 30, 2021, Charter served a total of 31.8 million residential and SMB customers, with 1.3 million net new customer relationships added over the last twelve months.
Second quarter total residential and SMB Internet customers increased by 400,000. As of June 30, 2021, Charter served a total of 29.6 million residential and SMB Internet customers, with 1.5 million total Internet customers added over the last twelve months.
Second quarter total residential and SMB mobile lines increased by 265,000. As of June 30, 2021, Charter served a total of 2.9 million mobile lines, with 1.2 million mobile lines added over the last twelve months.
Second quarter revenue of $12.8 billion grew by 9.5% year-over-year, driven by residential revenue growth of 6.8%, mobile revenue growth of 67.5% and advertising sales revenue growth of 65.1%.
Second quarter Adjusted EBITDA1 of $5.0 billion grew by 11.8% year-over-year.
Net income attributable to Charter shareholders totaled $1.0 billion in the second quarter.
Second quarter capital expenditures totaled $1.9 billion and included $124 million of mobile-related capital expenditures.
Second quarter free cash flow1 of $2.1 billion grew by 10.8% year-over-year.
During the second quarter, Charter purchased approximately 6.1 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $4.0 billion.
"Our operating strategy continues to deliver strong customer and financial growth despite an operating environment that has yet to return to normal," said Tom Rutledge, Chairman and CEO of Charter. "And the opportunity at Charter is what it has always been - to continue to create customer relationships with our high-quality connectivity services, delivering value for consumers and our shareholders over time."
1. Adjusted EBITDA and free cash flow are non-GAAP measures defined in the "Use of Adjusted EBITDA and Free Cash Flow Information" section and are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the addendum of this news release.
Key Operating Results
Approximate as of
June 30, 2021 (a)
June 30, 2020 (a)
June 30, 2019 (a)
Customer Relationships (c)
Total Customer Relationships
Total Customer Relationships Quarterly Net Additions
Total Customer Relationship Penetration of Estimated Passings (d)
Monthly Residential Revenue per Residential Customer (e)
Monthly SMB Revenue per SMB Customer (f)
Residential Customer Relationships Penetration
Single Play Penetration (g)
Double Play Penetration (g)
Triple Play Penetration (g)
% Residential Non-Video Customer Relationships
Total Internet Customers
Total Internet Quarterly Net Additions
Total Video Customers
Total Video Quarterly Net Additions
Total Voice Customers
Total Voice Quarterly Net Additions
Mobile Lines (h)
Total Mobile Lines
Total Mobile Lines Quarterly Net Additions
Enterprise Primary Service Units ("PSUs")
Enterprise Quarterly Net Additions
Footnotes- In thousands, except per customer and penetration data. See footnotes to unaudited summary of operating statistics on page 5 of the addendum of this news release. The footnotes contain important disclosures regarding the definitions used for these operating statistics. All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
During the second quarter of 2021, Charter's residential customer relationships grew by 299,000, compared to growth of 751,000 in the second quarter of 2020 and 164,000 in the second quarter of 2019. As of June 30, 2021, Charter had 29.7 million residential customer relationships, with year-over-year growth of 1.2 million, or 4.1%.
Charter added 365,000 residential Internet customers during the second quarter of 2021, compared to 842,000 during the second quarter of 2020 and 221,000 during the second quarter of 2019. The lower net additions relative to 2020 was primarily a function of fewer selling opportunities in the second quarter of 2021 compared to elevated COVID-19 related sales volume in the prior year period, while the higher net additions relative to 2019 was primarily the result of lower churn. Currently, 200 Mbps is the minimum speed offered to new Spectrum Internet® customers in 85% of Charter's footprint, with 100 Mbps the minimum speed offered in the remainder of its footprint. As of June 30, 2021, over 70% of Internet customers subscribed to tiers that provided 200 Mbps or more of speed. Charter also offers Spectrum Internet Gig across its entire footprint. Charter's Advanced Home WiFi, a managed WiFi service that provides customers an optimized home network while providing greater control of their connected devices, has been launched across more than 90% of Charter's footprint for new Internet connects.
Residential video customers decreased by 63,000 in the second quarter of 2021, compared to an increase of 102,000 in the second quarter of 2020 and a decrease of 150,000 in the second quarter of 2019. As of June 30, 2021, Charter had 15.4 million residential video customers.
During the second quarter of 2021, residential wireline voice customers declined by 99,000, compared to an increase of 38,000 in the second quarter of 2020 and a decline of 207,000 in the second quarter of 2019. As of June 30, 2021, Charter had 9.0 million residential wireline voice customers.
Second quarter 2021 residential revenue per residential customer (excluding mobile) totaled $112.85, and increased by 1.8% compared to the prior year period, given a one-time revenue write-down of $76 million in the prior year period for customers in the Keep Americans Connected ("KAC") program, bill credits provided in the prior year period as part of the Remote Education Offer, promotional rate step-ups and rate adjustments, partly offset by a higher mix of non-video customer relationships and a higher mix of lower priced video packages within Charter's video customer base.
SMB customer relationships grew by 33,000 in the second quarter of 2021, while second quarter 2020 and 2019 SMB customer relationships grew by 4,000 and 39,000, respectively. During the second quarter of 2021, enterprise PSUs grew by 4,000, compared to growth of 1,000 in the second quarter of 2020 and 5,000 in the second quarter of 2019.
During the second quarter of 2021, Charter added 265,000 mobile lines, compared to growth of 325,000 during the second quarter of 2020 and 208,000 during the second quarter of 2019. Spectrum MobileTM is available to all new and existing Spectrum Internet customers. Spectrum Mobile customers can choose one of two simple ways to pay for data, "Unlimited" or "By the Gig." All plans include 5G access, with no added taxes, fees or contracts.
Second Quarter Financial Results
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share data)
Three Months Ended June 30,
Small and medium business
COSTS AND EXPENSES:
Total operating costs and expenses
Adjusted EBITDA margin
% Total Revenue
Net income attributable to Charter shareholders
Earnings per common share attributable to Charter shareholders:
Net cash flows from operating activities
Free cash flow
Second quarter revenue increased by 9.5% year-over-year to $12.8 billion, driven primarily by growth in Internet, mobile and advertising sales revenues. Excluding advertising, revenue grew by 8.2% year-over-year.
Residential revenue totaled $10.0 billion in the second quarter, an increase of 6.8% year-over-year. The year-over-year revenue growth rate benefited in part from a revenue write-down of $76 million in the prior year period for customers in the KAC program.
Internet revenue grew by 15.2% year-over-year to $5.2 billion, driven by growth in Internet customers during the last year, promotional rate step-ups, rate adjustments, higher bundled revenue allocation and the aforementioned one-time revenue write-down in the prior year period for customers in the KAC program.
Video revenue totaled $4.4 billion in the second quarter, an increase of 0.2% compared to the prior year period, driven by promotional rate step-ups, rate adjustments and the aforementioned one-time revenue write-down in the prior year period for customers in the KAC program, partly offset by a higher mix of lower priced video packages within Charter's video customer base, lower bundled revenue allocation and a decline in video customers during the last year.
Voice revenue totaled $394 million in the second quarter, a decrease of 12.7% compared to the second quarter of 2020, driven by value-based pricing and a decline in wireline voice customers over the last twelve months.
Commercial revenue increased by 5.6% year-over-year to $1.7 billion, driven by SMB and enterprise revenue growth of 6.0% and 5.1% year-over-year, respectively. Second quarter 2021 SMB and enterprise revenue growth benefited from COVID-19 related impacts in the second quarter of 2020. Enterprise revenue growth was also impacted by lower cell tower backhaul revenue. Enterprise revenue excluding wholesale increased by 10.1% year-over-year, reflecting PSU growth and COVID-19 related impacts in the prior year period.
Second quarter advertising sales revenue of $411 million increased by 65.1% compared to the year- ago quarter, driven by higher local sales, advanced advertising revenue and national sales. The year-over- year growth in advertising sales revenue benefited from COVID-19 related impacts in the prior year period.
Second quarter mobile revenue totaled $519 million, an increase of 67.5% year-over-year, primarily driven by mobile line growth.
Other revenue totaled $201 million in the second quarter, an increase of 2.8% year-over-year.
Operating Costs and Expenses
Second quarter total operating costs and expenses increased by $575 million, or 8.0% year-over-
Second quarter programming costs increased by $105 million, or 3.6% as compared to the second quarter of 2020, reflecting contractual programming increases and renewals, partly offset by a higher mix of lower cost packages within Charter's video customer base, fewer video customers and lower pay-per-view expenses.
Regulatory, connectivity and produced content expenses increased by $180 million, or 36.9% year- over-year, primarily driven by higher sports rights costs given more games played in the second quarter of 2021 compared to second quarter 2020 as a result of COVID-19.
Costs to service customers decreased by $21 million, or 1.2% year-over-year, despite year-over- year residential and SMB customer growth of 4.2%. The year-over-year decrease in costs to service customers was primarily driven by lower transaction costs and lower bad debt partly driven by government stimulus packages, offset by previously announced wage increases for hourly field operations and call center employees as Charter meets its commitment to a minimum $20 per hour wage in 2022.
Marketing expenses increased by $22 million, or 3.1% year-over-year, driven by COVID-19 related impacts in the second quarter of 2020, including lower media placement rates and a payroll tax credit.
Second quarter mobile costs totaled $586 million, an increase of 42.0% year-over-year, and were comprised of device costs, customer acquisition costs, and service and operating costs.
Other expenses increased by $116 million, or 13.5% as compared to the second quarter of 2020, primarily driven by higher corporate costs and advertising sales expense.
Second quarter Adjusted EBITDA of $5.0 billion grew by 11.8% year-over-year, reflecting growth in revenue and operating expenses of 9.5% and 8.0%, respectively.
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Charter Communications Inc. published this content on 30 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2021 17:48:09 UTC.