Time Warner Cable Inc. reported strong financial results for the fourth quarter of 2013. Both the top and the bottom line outpaced the respective Zacks Consensus Estimate.
However, the company lost a significant amount of video subscribers in the reported quarter. The board of directors raised the quarterly dividend rate by 15% to 75 cents per share ($3 per annum per share). Time Warner Cable currently carries a Zacks Rank #3 (Hold).
Quarterly adjusted (excluding special items) earnings per share of $1.82 substantially beat the Zacks Consensus Estimate of $1.72. Quarterly GAAP net income came in at $540 million or $1.89 per share compared with $513 million or $1.68 per share in the prior-year quarter. At $5,577 million, quarterly total revenue outpaced the Zacks Consensus Estimate of $5,560 million, and was also up 1.7% year over year.
Quarterly adjusted operating income before depreciation and amortization (OIBDA) grew 1.6% year over year to $2,026 million. Operating income inched up 0.3% year over year to $1,173 million. Average monthly revenue per user rose 2.2% to $106.03. Residential high-speed data ARPU increased 12.4% to $46.21.
In the reported quarter, Time Warner Cable generated $1,599 million of cash from operations compared with $1,410 million in the prior-year quarter. Free cash flow in the fourth quarter of 2013 was $793 million as against $613 million in the year-ago quarter.
At the end of fiscal 2013, Time Warner Cable had $525 million in cash and marketable securities compared with $3,454 million at the end of 2012. Outstanding debt was $25,052 million as against $25,171 million at the end of 2012. At the end of fiscal 2013, the debt-to-capitalization ratio was 0.77, remaining flat with the figure reported at 2012-end.
Residential Services Segment
Quarterly total revenue was $4,580 million, up 0.1% year over year. Within the segment, video revenues were $2,536 million, down 5.6% from the prior-year quarter. High-speed data revenues were $1,531 million, up 13.7% year over year. Voice revenues were $493 million, down 6.5% year over year. Other revenues were $20 million, up 17.6% from the year-ago quarter.
Business Services Segment
Quarterly total revenues were $616 million, up 19.6% year over year. Within the segment, video revenues stood at $89 million, up 7.2% year over year. High-speed data revenues were $293 million, up 19.6% year over year. Voice revenues were $113 million, up by a substantial 29.9% from the year-earlier quarter. Wholesale transport revenues were $70 million, up 34.6% year over year. Other revenues were $51 million, up 6.3% year over year.
Advertising revenues dropped 11.2% year over year to $278 million.
Other revenues came in at $103 million, up 28.8% year over year.
Time Warner Cable is facing the brunt of growing competition as large telecom operators, such as Verizon Communications Inc. (VZ - Analyst Report) and AT&T Inc. (T - Analyst Report) , are gaining strong foothold in this field. Meanwhile, cable TV giant Comcast Corp. (CMCSA - Analyst Report) reported net video subscriber addition for the fourth quarter of 2013.
On Dec 31, 2013, Residential Video subscribers’ base was 11.197 million. Time Warner Cable lost 217,000 residential video subscribers in the reported quarter. At the same time, the Commercial Video subscribers’ base was 196,000, indicating a quarterly gain of 3,000 subscribers.
Residential High-speed Data subscribers’ base was 11.089 million. The company gained net 39,000 residential High-Speed Data subscribers. Commercial High-speed Data subscribers’ base was 517,000. The company also added 17,000 commercial High-speed Data subscribers. Residential voice subscribers’ base was 4.806 million, a quarterly gain of 1,000 subscribers. Commercial voice subscribers’ base was 275,000. Time Warner Cable gained 13,000 commercial voice subscribers in the reported quarter.
In the fourth quarter of 2013, Time Warner Cable lost 3,000 Triple play subscribers totaling 4.050 million, and 73,000 Double play subscribers totaling 4.971 million. However, the company gained 9,000 single-play subscribers totaling 5.987 million.