Residential broadband additions at Charter Communications reached 444,000 in the first quarter, far outpacing analysts expectations, while video losses were well below some forecasts, even as the company operated in two of the cities most affected by the COVID-19 pandemic.
Including small and medium business customers, broadband additions reached 464,000. Analysts had expected the company, which operates in New York and Los Angeles among other cities, to add 374,000 high-speed internet subscribers. The broadband numbers did not include about 119,000 customers that have taken advantage of free internet service offered to qualifying homes with K-12 and college students. Including those customers, and the broadband additions rose 583,000.
On a conference call with analysts, Charter chief financial officer Christopher Winfrey said that about half of the homes that took the free Internet offer also ordered an additional product, like voice, video or mobile.
“While some of these customers will no longer subscribe to these services after 60 days, the payment trends of customers that took video and phone is that most of these customers will remain,” Winfrey said.
The strong broadband additions were complemented by lower than expected video customer losses -- 70,000 in the period, or less than half the 170,000 some analysts expected them to lose.
The results helped drive Charter stock as high as $511 (up 3.2% or $15.77 each) per share in early trading Friday. The stock was trading at $503.17 (up $9.94 per share or 1.6%) at 9:48 a.m. May 1.
Related: Q1 Broadband Growth Helps Ease Video Slide for Comcast
In a research note, Evercore ISI media analyst Vijay Jayant said Charter's results (coupled with Altice USA’s, which has the bulk of its operations in the New York City area) “are clear evidence that even cable companies with high levels of exposure to COVID hotspots continue to perform well, driven by their attractive broadband products.”
Related: COVID-19 Spikes Data Adds, Upgrades for Altice USA
The strong customer results drove a 4.7% increase in revenue to $11.74 billion, and adjusted EBITDA rose 8.4% to $4.4 billion.
"Thanks to the dedication of our employees and the quality of our network, we have continued to deliver high quality connectivity services to millions of existing and new customers in the communities we serve, including homes, businesses, hospital and educational systems, and local, state and federal government institutions. And I am very proud that the products we deliver have played a key role in enabling social distancing, remote working, distance learning, and much more" chairman and CEO Tom Rutledge said in a press release. "Our ability to service existing customers with significantly more data, and install new customers at an accelerated rate, is a direct result of the commitment of our employees and the $40 billion of investment we have made in our infrastructure in just the last five years. Charter remains committed to delivering outstanding products and services, keeping the communities we serve connected, working and learning, and doing our part to help our country recover from this crisis. And we continue to invest in the next generation of communications technology and infrastructure that will allow us to service the future of connectivity."
