Charter Sees Internet Subscriber Loss Post-ACP

Charter Communications' internet subscriber numbers took a hit in Q2 from June's expiration of the affordable connectivity program, the company said Friday. It followed Comcast saying ACP wasn't a big weight yet but is expected to be a notable drag in Q3.

Q2 marked the worst broadband quarter ever for both those companies, MoffettNathanson's Craig Moffett wrote Friday. Moreover, ACP's full impact on growth rates likely won't be clear even after Q4, he said. "Until the smoke clears, non-ACP trends will look weaker than they actually are," he said. Verizon last week said it lost 410,000 prepaid wireless customers tied to ACP's ending (see 2407220024).

Charter lost 149,000 internet subscribers in Q2, with the vast majority of them related to ACP’s end, CEO Chris Winfrey said as the carrier announced Q2 earnings. The company has worked with former ACP subscribers “to preserve their connectivity” and retained “the vast majority” so far, Winfrey said. Indeed, ACP’s demise should mean more opportunities for selling connectivity, he insisted. Charter should have a better idea of ACP’s impact in Q4. Despite ACP issues, churn remains low, it reported.

Charter said it ended Q2 with 28.3 million residential internet subscribers, down 300,000 from the same quarter a year earlier; and 8.5 million residential mobile lines, up 2.1 million year over year. The company launched multiple wireless programs in Q2, including its Anytime Upgrade in April, which lets Unlimited Plus customers upgrade their phones whenever they want, and a buyout program in May that will pay off the existing phone balance for customers who switch to its mobile service from another provider.

Meanwhile, Comcast saw "minimal impact" in Q2 from the end of ACP but expects the bulk of program-related subscriber loss in Q3, CFO Jason Armstrong told analysts earlier last week as the company announced its Q2 results (see 2407230050). It said it ended the quarter with 29.6 million residential broadband subscribers, down from 29.8 million year over year.

ACP "is not all bad, from our perspective," Winfrey argued. Without ACP, more people are switching broadband providers more often, and "that can work to your advantage" if you are very competitive in pricing and products, he said.

Charter's 12.7 million residential video subscribers at the end of Q2 marked a loss of 1.3 million year over year. Winfrey said video subscriber losses came from rate increases and ACP, as customers “made choices based on affordability.” He said Charter’s carriage agreement, struck in May with Paramount, lets the cabler offer ad-supported versions of Paramount’s streaming services to its cable subscribers for free. That should become available around Labor Day. Pointing to the forthcoming additions of Disney+ Premium and Hulu, Winfrey said Charter’s hybrid streaming/linear video model should be “fully deployed next year.”

Charter ended the most-recent quarter with 6.2 million residential voice subscribers, down 1 million year over year.

It finished Q2 with 582,000 subsidized rural passings, up from 237,000 year over year. The company said Charter expects it will complete its Rural Digital Opportunity Fund buildout by the end of 2026. Winfrey said Charter’s 1 GB network is available to 58 million passings in its footprint, and its network is moving to symmetrical speeds and multimedia capability that will support such applications as augmented and virtual reality and AI. He said that roughly 30% of Charter’s residential internet customers who don’t buy traditional video service use more than 1 Tb of data each month.