Charter Communications, Inc. (CHTR) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals: while there are positive aspects like a new agreement with Verizon and strategic initiatives in mobile and video, financial metrics show declines in free cash flow and increased capital expenditures. The Q&A highlights some optimism in market strategy and competitive positioning, but also notes unclear responses on key issues. Overall, the financial performance and strategic outlook balance each other out, leading to a neutral sentiment.
Key Financial Performance
Mobile Lines Growth Added nearly 2 million mobile lines for growth of 19% year-over-year. This growth is attributed to being the fastest-growing mobile provider in the U.S.
Revenue Revenue was down about 0.5% in 2025 year-over-year. The decline was driven by customer losses and a challenging political advertising comparison.
EBITDA EBITDA grew by about 0.5% year-over-year in 2025. Growth was supported by operational efficiencies and cost management.
Internet Customers Lost 119,000 Internet customers in Q4 2025, which was an improvement compared to the previous year due to lower disconnects driven by last year's ACP-related impacts.
Video Customers Video customers grew by 44,000 in Q4 2025 compared to a loss of 123,000 in Q4 2024. This improvement was driven by lower churn and new pricing and packaging.
Residential Revenue Residential revenue declined by 2.4% year-over-year in Q4 2025. The decline was due to a higher mix of lower-priced video packages, a decline in video customers, and costs allocated to programmer streaming apps.
Commercial Revenue Commercial revenue grew by 0.3% year-over-year in Q4 2025. Mid-market and large business revenue grew by 2.6%, while small business revenue declined by 1.3%.
Advertising Revenue Advertising revenue declined by 26% year-over-year in Q4 2025, primarily due to less political revenue.
Programming Costs Programming costs declined by 8.4% year-over-year in Q4 2025. This was due to a higher mix of lighter video packages, a decline in video customers, and costs allocated to programmer streaming apps.
Adjusted EBITDA Adjusted EBITDA declined by 1.2% year-over-year in Q4 2025. However, for the full year 2025, EBITDA grew by 0.6%.
Net Income Net income attributable to Charter shareholders was $1.3 billion in Q4 2025, compared to $1.5 billion in the prior year period. The decline was due to lower adjusted EBITDA and higher income tax expense.
Capital Expenditures Capital expenditures totaled $3.3 billion in Q4 2025, $273 million higher than Q4 2024. The increase was due to multiyear software agreements and higher network evolution spending.
Free Cash Flow Free cash flow totaled $773 million in Q4 2025, about $200 million lower than the previous year. The decline was due to less favorable changes in working capital and higher capital expenditures.
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Operating Highlights
Invincible WiFi: A new product combining WiFi 7, 5G, and battery backup, set to launch in February 2026. It guarantees seamless connectivity even during outages.
Spectrum Front Row: A next-generation immersive content product developed in collaboration with Apple and the NBA, leveraging the company's fiber-based network.
Xumo platform: A unified search and discovery platform for live TV and apps, enhancing the video product offering.
Cox acquisition: Pending regulatory approval, this acquisition will expand Spectrum's coverage to over 70 million households, enabling new product development and market penetration.
Rural build-out: Completion of over 1.7 million subsidized rural passings by 2026, with growth opportunities in high-growth areas like Texas, Florida, and the Carolinas.
Mobile growth: Added nearly 2 million mobile lines in 2025, achieving 19% growth and maintaining status as the fastest-growing mobile provider in the U.S.
Video customer growth: Achieved growth in video customers in Q4 2025, reversing previous losses due to product improvements and new pricing strategies.
Cost efficiencies: Reduced operating expenses by 3.1% year-over-year in Q4 2025, driven by lower labor costs and bad debt expenses.
Service guarantees: Introduced guarantees for internet service, savings, and customer service, including a $1,000 savings guarantee for internet and mobile bundles.
AI and technology investments: Invested in AI tools to enhance customer satisfaction and operational efficiency, including self-service options and employee support.
Deleveraging strategy: Adjusted target leverage to a range of 3.5 to 3.75x post-Cox transaction, aiming for improved valuation and potential investment-grade ratings.
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Risk or Challenges
Revenue Decline: Revenue was down about 0.5% in 2025, driven by customer losses and a challenging political advertising comparison.
Internet Sales Challenges: The operating environment for new Internet sales reflects low move rates, higher mobile substitution, expanded cell phone Internet competition, and fiber overlap growth, leading to slightly lower year-over-year sales.
Customer Losses: Customer losses in Internet and other services contributed to revenue decline.
Regulatory Approval Risks: The expansion plan with Cox is contingent on regulatory approval, which poses a risk to the strategy.
Competitive Pressures: High competition in the Internet and mobile markets, including heavy device subsidy activity by competitors, impacts customer acquisition and retention.
Capital Expenditure Peak: 2025 was the peak year for capital expenditure, and while it is expected to decline, the high expenditure levels could strain financials in the short term.
Advertising Revenue Decline: Advertising revenue declined by 26%, including the impact of less political revenue.
Debt Levels: The company has significant debt, with $95 billion in debt principal and a leverage ratio of 4.15x, which could impact financial flexibility.
Integration Risks: The integration of Cox, if approved, may involve transition costs and operational challenges.
Economic Uncertainty: Economic conditions and customer behavior, such as low move rates, could continue to impact sales and revenue.
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Guidance & Outlook
Residential and Business Connectivity: The company aims to win in the residential and business connectivity marketplace in 2026 by focusing on superior value, quality service, and competitive advantages. They are not projecting broadband relationship growth this year but expect an improved trajectory from past investments.
Rural Build-Out: By 2026, Charter will nearly complete its rural build-out, adding over 1.7 million new subsidized rural passings, with growth expected in higher-growth areas like Texas, Florida, and the Carolinas.
Network Upgrades: 50% of the current spectrum network will be upgraded to symmetrical and multi-gig service by the end of 2026, with the remaining 50% to be completed by 2027.
Mobile Services: Charter plans to launch an additional MVNO for business with T-Mobile in the next 6 months. Mobile services are expected to continue growing profitably, improving broadband churn and driving more Internet sales.
Video Services: The company expects its video product to become a unique selling tool, improving broadband churn and serving as a competitive advantage. Growth in video is anticipated in the Cox footprint post-integration.
Capital Expenditures: 2025 was the peak year for capital expenditures at $11.66 billion. Spending is expected to decline significantly after 2026, with capital intensity returning to 13%-14% of revenue by 2028.
Free Cash Flow: Free cash flow is expected to grow significantly, with capital expenditures reducing to below $8 billion per year by 2028. This will provide substantial capital for shareholder returns.
Leverage and Debt Strategy: The company plans to reduce leverage to the low end of a 3.5 to 3.75x range within 3 years post-Cox transaction, aiming for improved debt ratings and broader investor appeal.
Customer Service Enhancements: In 2026, Charter will launch 'Invincible WiFi,' a market-first product combining WiFi 7, 5G, and battery backup. The company will also guarantee $1,000 in savings for customers taking Internet and two mobile lines.
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Shareholder Return Plan
Share Repurchase Program: During the quarter, Charter repurchased 2.9 million shares totaling $760 million at an average price of $259 per share. The company plans to continue returning capital to shareholders through its share repurchase program. Despite moving to a lower leverage target range of 3.5 to 3.75x post-transaction, Charter expects significant ongoing capital returns to shareholders.
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Key Q&A
Q:What does the new agreement with Verizon entail and how does it impact Charter's strand mount and offload strategy?
A:The new agreement with Verizon is an amended and modernized long-term MVNO agreement that supports profitable growth for both Charter and Verizon. It is a structural and long-term agreement that underpins Charter's operations. The offload rate has increased to around 89%, and Charter continues to roll out CBRS in positive ROI areas, with plans to cover all states with CBRS PAL licenses by the end of the year.
Q:How is Spectrum Mobile perceived in the market and what is its growth strategy?
A:Spectrum Mobile is still a relatively new brand, and its awareness and reputation are improving. The convergence strategy is working, as evidenced by growth despite market subsidies. Spectrum Mobile offers better speeds and savings compared to competitors. The company is focused on increasing brand awareness and demonstrating product capabilities, such as faster speeds through WiFi.
Q:How has Charter's market share trended in areas with fiber competition, and what is the outlook for EBITDA growth?
A:Charter has competed well against fiber for many years, maintaining greater penetration even in mature fiber markets. Overbuild impact is limited to a few percentage points of Internet penetration in the first year. Fixed wireless access has introduced new competition, but Charter remains confident in its position. EBITDA growth is expected to be slightly positive this year, with potential for growth excluding political advertising, driven by mobile growth, positive ARPU trends, and expense management.
Q:What is the sustainability of Video subscriber gains and what are Charter's goals in Silicon Valley?
A:Video subscriber gains are not the primary goal; the focus is on using Video to support broadband acquisition and retention. Charter aims to provide value and utility for customers while innovating with programmers. In Silicon Valley, Charter is promoting its network capabilities to developers, encouraging them to create products that leverage its low-latency, multi-gig network. The goal is to demonstrate the potential of the network and drive product innovation.
Q:How is Charter balancing operating expense growth with investment opportunities?
A:Charter has already made significant investments in pricing, in-sourced sales and service, and technology platforms. The company is focused on increasing efficiency while continuing to innovate and develop new products. Cost to service customers is expected to decrease slightly, and marketing expenses are expected to grow more slowly this year. Charter aims to generate EBITDA growth while driving medium- and long-term growth.
Q:What is Charter's pricing strategy and how does it impact ARPU?
A:Charter's pricing strategy involves lower promotional and retail prices with price locks for 2-3 years, which has helped maintain or grow customer relationship ARPU. Internet ARPU is expected to grow this year, while Mobile ARPU has declined due to product mix and contra revenue. Video ARPU faces headwinds from programming costs and tier mix, but the focus is on margin rather than individual costs.
Q:What is Charter's view on fiber overbuilders and the competitive environment?
A:Charter believes fiber overbuilders are unlikely to reach their ROI goals within its footprint. The competitive environment is expected to remain challenging, but Charter has a long history of competing effectively against fiber. The company anticipates a natural throttling of overbuilds as density decreases and costs increase.
Q:What is the outlook for promotional activity and price locks?
A:Charter plans to maintain its current pricing strategy, including price locks, as they provide competitive advantages and customer comfort. The company may evolve its pricing strategy over time but sees no immediate need for changes. Promotional activity is expected to continue supporting customer acquisition and retention.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the new agreement with Verizon, particularly regarding its impact on strand mount and offload strategy. Additionally, responses about the sustainability of Video subscriber gains and the competitive environment with fiber overbuilders lacked clarity and specific data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America connectivity
Anninger Vice
Apple NBA
Broadband churn
CBRS connectivity
CFO product
Carolinas end
Florida Carolinas
Front Row
Internet competition
Internet sale
Investor
MNO capability
MVNO Mobile
Mobile broadband
Video product
approval
apps
battery backup
connectivity relationship
connectivity service
content
customer loss
fiber network
flow cash
game inch
hour
network service
owner
platform
product service
quality service
saving
service capability
service footprint
spectrum
term customer
traffic
usage
utility quality
CHTR Transcript
Charter Communications, Inc. (CHTR) Q4 2025 Earnings Call Transcript
Unknown1-30
The earnings call reveals mixed signals: while there are positive aspects like a new agreement with Verizon and strategic initiatives in mobile and video, financial metrics show declines in free cash flow and increased capital expenditures. The Q&A highlights some optimism in market strategy and competitive positioning, but also notes unclear responses on key issues. Overall, the financial performance and strategic outlook balance each other out, leading to a neutral sentiment.
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Unknown10-31
The earnings call reflects a mixed sentiment. While there's optimism about EBITDA growth, free cash flow surge, and the Cox acquisition, there are concerns about declining advertising revenue and significant upcoming EBITDA decline. The Q&A highlighted competitive challenges and unclear timelines for improvements. The strategic plan suggests potential positive impacts from tax savings and network evolution, but the lack of strong positive catalysts like new partnerships or record revenues tempers expectations. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
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