Charter to cut $2 billion in costs under ‘fundamental redesign’ to revive growth
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Nov 6 : Charter Communications said on Friday it would cut $2 billion in annualized operating costs over the next 18 months as part of an overhaul of its operating model aimed at reviving growth in a competitive cable and broadband market.
Shares of the company fell 2.7 per cent in morning trading. They have fallen 39.7 per cent so far this year through Thursday’s close.
Charter said it would revamp how it markets and sells its core internet service and lean more on its mobile and video products to add customers and improve retention.
Charter has “not generated the customer growth and performance we expect,” CEO Chris Winfrey said on a post-earnings call.
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The cost cuts are separate from more than $1 billion in anticipated synergies from Charter’s acquisition of Cox Communications, which closed on August 19.
The $34.5 billion deal, including debt, combined two of the largest US cable and broadband operators as Netflix, Disney+, Verizon and T-Mobile intensify competition for customers.
Charter lost 233,000 internet customers in the third quarter on a pro forma basis, versus a loss of 171,000 a year earlier, while video customers fell by 77,000, compared with a decline of 121,000.
“Charter’s mounting broadband losses are alarming and underscore the scale of the challenge,” said Paolo Pescatore, founder of PP Foresight.
The $2 billion cost-cutting program is necessary, but “it cannot simply cut its way back to growth,” he added.
Charter on Friday reported third-quarter revenue of $14.9 billion, below analysts’ average estimate of $15.03 billion, according to LSEG data.
It posted a net loss of $20.50 per share, versus income of $8.50 last year, driven mainly by a $6.3 billion franchise impairment charge.
The company had total debt of $108.6 billion at the end of September, against cash of $573 million.
Separately, Reuters reported on Tuesday India’s Jio Platforms has held talks with Charter and Comcast about licensing its wireless broadband technology for potential stakes.
Source: Reuters
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