Mediacom Communications got a market bump during a slightly down day for
cable stocks, delivering quarterly results a little ahead of guidance and
promising capital spending cuts next year.
Mediacom, the No. 8 domestic MSO, said it plans to trim capital expenditures
by about $20 million in 2003, down to a range of $390 million to $410 million
from an earlier forecast that topped out at $430 million, mainly through savings
on customer equipment like digital boxes.
That in turn should see Mediacom generating 'free cash flow' -- or operating
cash flow after capex and interest payments -- in the second half of 2003,
chairman and CEO Rocco Commisso said.
Investors souring on companies, like cable operators, that carry a lot of
debt are looking more to free cash flow as, in cable's case, operators near the
end of a hugely expensive system upgrade cycle.
Mediacom stuck to 2002 guidance on revenue ($923 million to $931 million
range) and operating cash flow ($380 million to $385 million).
But with the digital-TV customer count stuck at 329,000, the same as at the
end of March, Mediacom lowered its forecast of digital customers by about
20,000, to a year-end maximum of 380,000.
Mediacom gained 27 cents, or 6 percent, to close at $4.67, according to
Nasdaq.
In the quarter, revenue rose 10.5 percent, to $230.8 million, and operating
cash flow rose 20 percent, to $95.9 million.
The guidance had been for 10 percent and 18 percent growth, respectively.
Excluding 3,000 subscribers Mediacom bought, the company's basic subscriber
count ticked up 0.5 percent from a year ago.
But the basic count of 1,585,000 at June 30 declined by 15,000 since March
31.
Mediacom raised basic rates by an average of about $3 earlier in the first
quarter.
The MSO also bumped up digital-TV rates, eliminating discounts that had been
in place in former AT&T Broadband systems that represent about half the
basic subscriber base.
Mediacom knew some customers would downgrade to analog because of the price
increase, but there were more disconnects that expected, officials said.
The high-speed data customer count rose a healthy 18,000, to end the quarter
at 145,000.
