Charter projects that Q1 revenue will be up 4.5%

Wed, 04/14/2010 - 8:50am
Mike Robuck

Spurred by subscriber growth in digital video, data, telephone and commercial services, Charter said today that preliminary results point toward a 4.5 percent increase in revenue over the previous first quarter a year ago.

Charter said it expects revenues for the first quarter to be approximately $1.735 billion, while operating costs and expenses – which include operating and selling, general, and administrative expenses – are expected to be approximately $1.098 billion, an increase of 5.1 percent compared with the same quarter a year ago.

Charter, the nation’s fourth-largest cable operator, said the increase in operating expenses for the quarter was primarily due to increased programming expenses related to annual rate increases and higher labor costs.

Charter still expects that its capital expenditures for the full year will be approximately $1.2 billion as it continues to target deploying switched digital video to more than 60 percent of its footprint and DOCSIS 3.0 to approximately half of its footprint by the end of this year.

"We are pleased with our solid first-quarter performance, as we added new digital video and high-speed Internet customers at an accelerated pace compared with last year's first and fourth quarters," said Mike Lovett, who was named as Charter’s CEO and president earlier this week. "Our robust and scalable infrastructure provides a solid foundation for our bundled service offerings. As we add new communications and entertainment solutions in the residential and commercial markets, we believe there is opportunity for future growth.”

Charter, which emerged from Chapter 11 bankruptcy late last year, said basic video subscribers decreased by 23,400, which was in line with its year-ago performance.

Digital video customers increased by approximately 95,800, compared with 25,600 in the first quarter of 2009, while high-speed Internet residential customers increased by approximately 103,700, compared with a net gain of 71,900 in the first quarter of 2009.

On the phone side of the business, residential telephone customers increased by approximately 66,900, which was down from the 70,400 additions a year ago.

Charter, which will report its first-quarter results on May 6, also announced that it expects capital expenditures for the first quarter to be approximately $310 million, compared with $269 million in the first quarter of 2009.

Charter said it has liquidity of about $1 billion, including cash and access to capital under the $1.3 billion revolving credit facility.

Charter also announced today that two of its subsidiaries will buy back and then retire $1.57 billion of debt that was slated to come due over the next few years. Charter, which has been finically backed by Microsoft co-founder Paul Allen, is buying back the debt in order to reduce its interest payments.

CCO Holdings LLC intends to launch a tender offer to repurchase $800 million of senior notes that are due in 2013. Those notes have an interest rate of 8.75 percent.

Charter Communications Operating LLC, a subsidiary of CCO Holdings, is slated to buy back $770 million of senior second lien notes that are due in 2014 with an interest rate of 8.375 percent.

Unless the offer is extended or shortened, the offer will expire at 11:59 p.m. on May 11.

In order to fund the tender offer, Charter said it would issue $1.6 billon of new debt in two segments of senior notes that will mature in 2018 and 2020. CCO Holdings will offer the two new tranches of senior notes.

More Broadband Direct 4/14/10:
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•  Qualcomm to let phones record mobile TV shows
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