Charter Communications

Ticker
$CHTR
Industry
Cable
Type
Compounder
Rating
Not Rated
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Notes

Twitter thread on how Charter has gotten cheaper (Jan 2022)

Charter has gotten cheaper on a P/CFO basis...
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Charter is expanding into mobile phone lines and has gained ~3.5m subscribers since launch... New “bundle” will consist of broadband + mobile
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Cash flow sources & uses
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Since the 2015-2016 merger with Time Warner Cable and Brighthouse, Charter has started to repurchase plenty of stock — market cap hasn’t changed all that much though market cap was $102bn in June 2017 and is $102bn in January 2022 — repurchases totaled $46.6bn since yearend 2016
Stock prices follow earnings — Charter has gotten cheaper on a price/cash flow basis despite continually growing per share cash flow in recent years
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Revenue growing 5-10% and EBITDA growing 10-14% YoY
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Competition from $T $VZ in broadband during 2022
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Competitor Altus commentary on elevated capex
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Financials & Valuation

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Capitalization (2Q22) — There are 183m shares outstanding x $460 share price = $84bn market cap. Net debt is $96bn for an enterprise value of $180bn. Trailing EBITDA at 2Q22 is $21.4bn for leverage of 4.5x and an EV/EBITDA multiple of 8.4x.

Links & Resources

August 2022 (2Q22) — More growth but FCF down

Revenue and EBITDA grew YoY again (6.2% and 9.7%) but free cash flow was down almost 20% from capex increasing (9% jump). Charter is becoming a cash tax payer with NOLs being used — Q2 cash taxes were $470m vs. $69m in 2Q21 and $157m for all of 2021. Both Charter and Comcast struggled with new customer relationships. Total customers fell a smidge in Q2. The push into mobile continues to do well with revenue growing 40% in the Q and YTD (now makes up >5% of total sales). Profitability is unknown but management expects it to eventually contribute to EBITDA growth.

Trailing EBITDA was $21.4bn and FCF was $7.9bn. Charter repurchased $4.3bn stock at an average price of $510/sh in Q2.

At $460/sh, Charter is currently trading at 10.6x FCF and 8.4x trailing EBITDA. Both are below long-term averages.

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April 2021 — WSJ article: Cable Companies Emerge as Force in Cellphone Business