Charter tops Comcast with 380K wireless net adds in Q4

Charter Communications posted the highest ever subscriber net additions for its mobile virtual network operator (MVNO) service in Q4, a feat which helped its wireless revenue grow by more than 47%.

During an earnings call, Charter CEO Tom Rutledge noted it currently only captures about 27% of combined household spending on wireline and mobile connectivity within its footprint. He said this means it still has “a lot of runway, and that there’s a huge opportunity for us to grow our business, both horizontally and vertically.”

In a note to investors, New Street Research analyst Jonathan Chaplin pointed out that if Charter is able to achieve 50% mobile penetration of its current broadband customer base that would factor out to 37.5 million mobile subscribers. “At $30 of ARPU that would add $13.5BN in revenue. At MVNO margins of perhaps 20% that would add $2.7BN in EBITDA,” he wrote.

The operator added 380,000 Spectrum Mobile customers in Q4, including 363,000 residential and 17,000 small and medium business lines. The total was up from 315,000 in Q4 2020 and 288,000 in Q4 2019. It was also higher than rival Comcast’s tally for the period, which came in at a record-high 312,000.

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All told, Charter grew the number of mobile lines by 1.2 million in 2021 to a total of nearly 3.6 million.

Mobile revenue grew 47.5% to $632 million in the quarter, but sales were still outpaced by expenses, which totaled $724 million.

Analysts at MoffettNathanson acknowledged Charter’s mobile revenues are “still small, but they are growing furiously, to the point that wireless accounted for 4.8% of Charter’s total revenue.” They tipped Charter’s wireless business to achieve breakeven EBITDA this year.

“Wireless is emerging as a significant contributor to growth,” they wrote.

Charter CFO Jessica Fischer said it expects to spend around $382 million on mobile capital expenditures in 2022, with investment primarily focused on back office systems, the start of construction on its CBRS small cell network and additional store build outs.

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COO Chris Winfrey reiterated the operator’s plan to launch a CBRS field trial in a full market area this year but noted it won’t be rolling out the spectrum across its entire footprint just yet. “I wouldn’t hang too much on that just for 2022,” he said. “But there’s a lot of development that’s in the pipeline to continue to make this product better than our competitors and more integrated.”