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Charter Communications: Buyouts to Boost SMB Business
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Leading cable multi-service operator (MSO) Charter Communications Inc. (CHTR - Free Report) is set to strengthen its foothold in hybrid fiber coax (HFC) and fiber networks with the acquisition of two U.S. cable operators – Time Warner Cable) and Bright House Networks. This will also help Charter Communications better address small and medium-sized business (SMB) and large businesses.
The Twin Buyouts
Charter Communications took over Time Warner Cable and Bright House via a mega merger valued at $65 billion. The acquisitions have helped Charter Communications become one of the largest video providers in the country, on par with players like ComcastCorp. (CMCSA - Free Report) , AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) . The company will also serve more than 25 million pay-TV and high-speed broadband customers across 41 states. Notably, these deals are likely to benefit the company in terms of geographic expansion and operating cost synergies, which in turn will boost its bottom line and free cash flow.
SMB Business Growth
These acquisitions will help Charter Communications expand its HFC and fiber footprint and interconnection agreements across U.S. markets with a more concentrated ownership of assets in a particular designated market area (DMA).
The Time Warner Cable deal has helped Charter Communications gain 150,000 miles of fiber and 75,000 on-net buildings. Apart from its own network, Time Warner Cable’s 130 External Network-to-Network Interface (E-NNI) agreements with 25 other service providers will allow Charter Communications to expand into larger business accounts in the U.S.
Meanwhile, the Bright House Networks merger will result in higher scale across number of key vertical industry segments such as healthcare, hospitality, government and education and a wider Ethernet footprint with extra 18,000 miles of fiber for Charter Communications.
These deals have also brought 25.6 million residential and SMB customers under Charter Communications' network. The company has also seen a rise in SMB customer count by 47,000 from 35,000 recorded at the end of the second quarter of 2015. SMB primary service units (PSUs) rose 82,000 versus 69,000 at the end of second-quarter 2015. Meanwhile, Charter Communications retained 1.3 million SMB customer relationships and 2.3 million SMB PSUs as of Jun 30, 2016. The enterprise PSU amount rose 22% at the end of the second quarter, with a total of 90 customers.
Additionally, Charter Communications intends to make its Spectrum product line available to the exiting SMB customers of Time Warner Cable and Bright House Networks by mid-2017.
The company has raked in overall revenues of $10 billion at the end of the second quarter, which highlights a 6.6% year-over-year hike on a 5.6% and 13.4% rise in residential and commercial revenue growth, respectively. Thus, a multi-site business will help Charter Communications to serve multi-site businesses with better and improved footprint and so the commercial marketplace also improves.
Other Opportunities
Apart from enhancing its SMB Business by expanding its cloud-based Spectrum Guide, Charter Communications aims to offer its self-installation option to customers. This new digital-project commencing in 2017 at Time Warner Cable and Bright House markets, will avail the Charter Communications’ all-digital strategy of two-way set-top boxes with video on demand and advanced guide functionality on every TV outlet. The project is supposed to complete by 2018. However, the company has not disclosed its new subscriber count for the self-install option.
In the near future, Charter Communications intends to start practicing electronic connections instead of physical truck rolls, thus enabling customers to enhance their self-installation and self-service practices.
The Bottom Line
Undoubtedly, the twin buyouts will help Charter Communications offer enhanced services and more streaming video product options to customers. However, Charter Communications has been grappling with multiple legal issues. The company was sued by Univision Communications Inc. -- the largest TV broadcaster of Spanish language in the U.S. – over carriage licensing fees and also by Fox News for paying low transmission rates for the latter’s news channel.
Charter Communications currently has a Zacks Rank #3 (Hold).
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Charter Communications: Buyouts to Boost SMB Business
Leading cable multi-service operator (MSO) Charter Communications Inc. (CHTR - Free Report) is set to strengthen its foothold in hybrid fiber coax (HFC) and fiber networks with the acquisition of two U.S. cable operators – Time Warner Cable) and Bright House Networks. This will also help Charter Communications better address small and medium-sized business (SMB) and large businesses.
The Twin Buyouts
Charter Communications took over Time Warner Cable and Bright House via a mega merger valued at $65 billion. The acquisitions have helped Charter Communications become one of the largest video providers in the country, on par with players like Comcast Corp. (CMCSA - Free Report) , AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) . The company will also serve more than 25 million pay-TV and high-speed broadband customers across 41 states. Notably, these deals are likely to benefit the company in terms of geographic expansion and operating cost synergies, which in turn will boost its bottom line and free cash flow.
SMB Business Growth
These acquisitions will help Charter Communications expand its HFC and fiber footprint and interconnection agreements across U.S. markets with a more concentrated ownership of assets in a particular designated market area (DMA).
The Time Warner Cable deal has helped Charter Communications gain 150,000 miles of fiber and 75,000 on-net buildings. Apart from its own network, Time Warner Cable’s 130 External Network-to-Network Interface (E-NNI) agreements with 25 other service providers will allow Charter Communications to expand into larger business accounts in the U.S.
Meanwhile, the Bright House Networks merger will result in higher scale across number of key vertical industry segments such as healthcare, hospitality, government and education and a wider Ethernet footprint with extra 18,000 miles of fiber for Charter Communications.
These deals have also brought 25.6 million residential and SMB customers under Charter Communications' network. The company has also seen a rise in SMB customer count by 47,000 from 35,000 recorded at the end of the second quarter of 2015. SMB primary service units (PSUs) rose 82,000 versus 69,000 at the end of second-quarter 2015. Meanwhile, Charter Communications retained 1.3 million SMB customer relationships and 2.3 million SMB PSUs as of Jun 30, 2016. The enterprise PSU amount rose 22% at the end of the second quarter, with a total of 90 customers.
Additionally, Charter Communications intends to make its Spectrum product line available to the exiting SMB customers of Time Warner Cable and Bright House Networks by mid-2017.
The company has raked in overall revenues of $10 billion at the end of the second quarter, which highlights a 6.6% year-over-year hike on a 5.6% and 13.4% rise in residential and commercial revenue growth, respectively. Thus, a multi-site business will help Charter Communications to serve multi-site businesses with better and improved footprint and so the commercial marketplace also improves.
Other Opportunities
Apart from enhancing its SMB Business by expanding its cloud-based Spectrum Guide, Charter Communications aims to offer its self-installation option to customers. This new digital-project commencing in 2017 at Time Warner Cable and Bright House markets, will avail the Charter Communications’ all-digital strategy of two-way set-top boxes with video on demand and advanced guide functionality on every TV outlet. The project is supposed to complete by 2018. However, the company has not disclosed its new subscriber count for the self-install option.
In the near future, Charter Communications intends to start practicing electronic connections instead of physical truck rolls, thus enabling customers to enhance their self-installation and self-service practices.
The Bottom Line
Undoubtedly, the twin buyouts will help Charter Communications offer enhanced services and more streaming video product options to customers. However, Charter Communications has been grappling with multiple legal issues. The company was sued by Univision Communications Inc. -- the largest TV broadcaster of Spanish language in the U.S. – over carriage licensing fees and also by Fox News for paying low transmission rates for the latter’s news channel.
Charter Communications currently has a Zacks Rank #3 (Hold).
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