Charter Communications reported strong subscriber metrics for its broadband business in the first quarter, as video subscribers continued to drop off.
“With the most customer-impacting elements of our integration behind us, we are now focused on growing our business. We are doing that by driving high quality subscriptions, reducing transactions and churn, and maintaining and creating product superiority with a value proposition that our competitors don’t provide,” said Tom Rutledge, chairman and CEO of Charter, in a statement.
Charter added 428,000 net internet subscribers in the first quarter, including 398,000 residential customers. This compares to gains of 334,000 a year ago, with the year over year improvement attributed to a decline in churn thanks to improvements in product, billing and service activities.
“Our core asset, our powerful, flexible and easy-to-upgrade network, allows us to offer data-rich wireline and wireless connectivity products to both consumers and businesses.” Rutledge said Tuesday on the company’s earnings call. “And the demand for both speed and throughput on our network continues to increase.”
Rutledge said residential monthly internet data usage was “rising rapidly” with monthly median data usage at more than 200 GB per customer. That figure climbs to more than 400 GB per month for non-video subscribers.
More than 80 percent of Charter’s internet subscribers take packages with speed tiers of 100 Mbps or more, with 30 percent in 200 Mbps or faster speed tiers, Rutledge said.
Charter also launched DOCSIS 3.1, making 1 Gbps service available across its footprint. Rutledge said Charter still only penetrates 50 percent of the company’s 51 million passings, leaving opportunity for more growth.
Overall, Charter created 351,000 customer relationships in the first quarter, with customer growth of 4% over the last 12 months.
The cable operator reported losing 152,000 net video subscribers, compared to 121,000 in the year ago period. Operators continue to shed pay TV subscribers, with competitors also reporting losses in the first quarter including AT&T (661,000), Verizon (53,000) and Comcast (107,000).
While the market trend of declining pay TV customers is one Charter expects to continue, executives said video offerings will still play a role.
“Video remains integral part of our business strategy for connectivity services even as it drives less standalone profit over time,” Charter CFO Christopher Winfrey said on the company’s earnings call Tuesday.
Winfrey also said Charter sees an opportunity to convert customers leaving satellite TV into Charter broadband customers.
Interestingly, while Charter has put a lot of effort into developing its own video platform and user interface, Rutledge in response to questions about licensing Comcast’s X1 platform said Charter has held discussions with Comcast about licensing both its popular X1 platform and new IP video platform.
“If we can make that [X1] the best platform for us, we’d certainly be willing to do that and we think [Comcast would] be a great provider,” Rutledge said. “To date, we haven’t.
To be clear, Rutledge said Charter still likes its own UI, along with the ability to tweak it at the company’s own pace and differentiate itself.
“If we can check all the boxes in terms of having complete flexibility, low-cost, we could become a vendor of Comcast in terms of their platform, to date we haven’t been able to do that,” he said.
In the first quarter revenues grew 5.1 percent year over year to $11.2 billion. Charter saw residential revenue climb 4.2 percent, and commercial revenue grow 4.3 percent. The cable operator also reported $140 million in mobile revenue. Adjusted EBITDA of $4.1 billion was up 4.2 percent over a year ago, and net income for the quarter was $253 million.
Check out how Charter’s Spectrum Mobile business performed here.