Charter Communications chief financial officer Chris Winfrey, citing the company ‘s past success with wireline phone service, said its wireless service could have a similar trajectory over time, growing mobile subscribers as much as four-fold over the next several years.
At the JP Morgan Media & Communications conference Monday, Winfrey said that Charter’s approach to the wireless business has helped it grow that product significantly since it launched in 2018. Pointing to the company’s success in the wireline phone business, it’s not much of a stretch to assume the same growth path could be ahead for wireless.
Charter launched Spectrum Mobile in June 2018, part of an MVNO agreement the company has with Verizon Communications. In Q1, Spectrum Mobile had 2.7 million residential and business subscribers, nearly double the 1.4 million in the prior year period. Wireline phone customers peaked around 2016 at about 11.5 million and were at 10.4 million residential and business customers in Q1.
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Wireline penetration rates have been about half of broadband penetration over the years. As more and more cable companies begin to bundle wireless with broadband service, those penetration rates are expected to climb.
“I don't think people took us seriously when we came into the voice market,” Winfrey said, adding that today, Comcast and Charter are the largest wireline phone service providers in the country. “And the way we did it is because we weren't the incumbent, we had the ability to save customers money, we had the ability to bundle it, and as a result we took down phone pricing dramatically across the entire industry and the entire US. Over 20 years we became the largest operators. At its peak you could almost count as clockwork that voice subscribers would be about half of broadband and if it hadn’t been for mobile substitution, those numbers were continuing to increase. I think our opportunity is at least that.”
Charter finished the first quarter with 29.2 million broadband subscribers and has been growing at a 7% annual rate over the past 3 years. Charter’s wireless customers have doubled over the past two years, and if it were to continue that pace, would reach about 15 million customers by mid-2023. While that may be a bit optimistic, many analysts predict that Charter will add about 1.1 million mobile customers annually over the next few years, even at that pace it could have nearly 15 million wireless customers by 2030.
At the JP Morgan conference, Winfrey said Charter does not view wireless as a standalone product, but rather as an extension of its broadband service. He added that all of its sales channels are required to sell wireless with its other products.
“We ask that mobile is part of every single selling opportunity we have, whether that's in inbound sales, whether that’s in the stores, whether that’s in direct sales,” Winfrey said. “Every single one of our sales channels, including online, is required to have that conversation.”
