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Charter services grow, but charge widens Q4 loss

Wed, 02/27/2008 - 8:48am
Brian Santo

Charter Communications’ fourth quarter and yearly revenue were up in all service segments, save ad sales. Revenue was $1.5 billion in the quarter, up 9.9 percent, driven primarily by growth in the telephony and high-speed data (HSD) sectors.

But costs also rose, and a $178 million charge for “impairment of franchises” sent the company to a Q4 2007 loss of $468 million, compared with a Q4 2006 loss of $396 million.

Looking ahead, the company said it plans to introduce 16 Mbps HSD service across its footprint. It is also beginning to see success with a two-service bundle of phone and data, and this year, the MSO intends to focus on selling that combination to potential customers who do not subscribe to Charter video.

Charter has also been growing its business services operation and intends to continue building on that success.

With regard to the Q4 2007 impairment charges, in the course of auditing financial results, the company calculates the value of its franchise assets. “We revised our estimates of future franchise cash flows as compared to those used in prior valuations – largely driven by increased competition being experienced by us and our peers,” a Charter spokesperson said.

The result was a $178 million downward adjustment in the value of the company’s franchise assets, from about $9.1 billion to about $8.9 billion.

As of Dec. 31, Charter served approximately 5.6 million customers, representing 11.8 million revenue-generating units (RGUs). That figure includes 5.2 million analog video subscribers, 2.9 million digital video customers, 2.6 million HSD subscribers and 959,300 telephony customers.

In keeping with industry trends, Charter’s analog video customers decreased in Q4 – by 66,400 – while digital video customers increased by approximately 59,700. For the full year, the company gained 150,100 digital video customers and lost 116,300 analog video customers.

HSD customers increased by approximately 50,500 in the fourth quarter, and by 289,100 throughout the year. Telephony customers increased by approximately 155,300 in Q4, and by just more than half a million for the year.

Fourth-quarter 2007 total ARPU increased 12.9 percent, to $97.99, from the like period in 2006, driven primarily by bundling, advanced services growth, and upgrading customers to higher Internet speeds and programming tiers. Video ARPU increased 5.8 percent due to growth in revenue from advanced services and rate adjustments. HSD ARPU increased 4.8 percent, primarily due to content improvements and customers purchasing enhanced speeds.

At the same time, the company announced it has surpassed one million VoIP customers. The company said that Charter Telephone is currently available to 9 million homes.

More Broadband Direct:

• Charter services grow, but charge widens Q4 loss 

• Comcast in seating shenanigans at FCC hearing 

• WSJ: Qwest, Verizon in talks regarding possible wholesale deal 

• Justice Department will not block Liberty Media’s DirecTV deal 

• Unity consortium building fiber optic cable between U.S., Asia 

• Broadband Briefs for 2/27/08

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