IP Democracy: Charter: We've Lost 4% of Subs. to FiOs in Keller
St. Louis, MO-based cable operator Charter Communications issued its Q4 05 earnings this morning, and as has been typical of this troubled company, results were decidedly mediocre. Certainly one factor affecting Charter is stepped-up competition from DBS and telcos, although according to CEO Neil Smit, Charter hasn’t been hard hit by Verizon’s FiOs service in its Keller, TX market.
Verizon’s first multichannel video service over its FTTP-based platform kicked off in Keller last year and the telco maintains it has achieved 20% penetration since launch. If that’s the case, Smit says, Charter isn’t feeling it.
“We’ve lost 4% [of our subscribers] in Keller,” Smit said during Charter’s earnings call. “The other sixteen points aren’t coming from us.”
Smit also dissed Verizon’s FiOs initiative as overly expensive. “They spent $2 million to get 2,000 subs,” he said, which translates into a subscriber acquisition cost of $500 per customer, “a lot higher than us.”
Despite anecdotal tales of Charter slashing service prices once FiOs kicked off in Keller, Smit said that Charter has never lowered prices to compete with Verizon. “We did not do any price adjustments for the Verizon entry. We adjusted promotional prices for DSL competition a year before Verizon entered the market.”
Smit said that Charter hasn’t yet launched voice service in Keller, but when it does, sometime in March, the competitive dynamics in that market could change because both competitors will then be offering a three-product bundle.
| Charter Operational Statistics | ||
| Subscribers and Penetration | 4Q04 | 4Q05 |
| Homes Passed | 12,085,900 | 12,519,300 |
| Basic subscribers | 5,991,500 | 5,884,500 |
| Basic penetration | 50% | 47% |
| Monthly Analog Rev./Sub. | $ 37.52 | $ 37.66 |
| Digital Cable | 4Q04 | 4Q05 |
| Digital customers | 2,674,700 | 2,796,600 |
| Quarterly net sub adds | (14,200) | 47,200 |
| Digital penetration of total subs | 44% | 48% |
| Revenue/Digital Sub./Mo. | $ 23.00 | 25.45 |
| High-Speed Data | 4Q04 | 4Q05 |
| HSD customers | 1,884,000 | 2,196,400 |
| Quarterly net sub adds | 64,500 | 76,400 |
| HSD penetration of total HP | 15.6% | 17.5% |
| Revenue/HSD Sub./Mo. | 36.37 | 36.6 |
| Telephony | 4Q04 | 4Q05 |
| Telephony homes passed | 750,000 | 2,918,000 |
| Telephony customers | 45,400 | 121,500 |
| Quarterly net sub adds | 5,200 | 31,600 |
| Penetration of telephony HP | 6.1% | 4.2% |
| Telephone Rev./Tel. Sub./Mo. | 41.95 | 39.57 |
| Bundled Customers | 4Q04 | 4Q05 |
| Total Bundled Customers | 1,659,700 | 1,944,800 |
In terms of Charter’s actual performance, the company limped along during the quarter, posting continued losses in basic subscribers, tepid growth in digital subscriptions, moderate growth in high-speed data customers and decent gains in voice customers.
On the voice front, Charter added 31,600 net new voice customers, a record quarterly jump for the operator, ending 2005 with 121,500 total voice customers. At the same time, Charter continued to accelerate its VoIP build-outs, pushing the technology to 2.91 million homes by year-end.
Posted by Cynthia Brumfield on February 28, 2006 10:12 AM to IP Democracy