Charter's Q3 2025 Earnings Call: Contradictions Emerge on Tax Savings, Broadband Growth, Video Strategy, and Marketing Shifts

Date of Call: October 31, 2025

Financials Results

• Revenue: Consolidated Q3 revenue down 0.9% year-over-year (management: 'Revenue was down about 1% YoY'); revenue would have grown 0.4% ex-advertising and ex costs allocated to streaming apps (both periods).

Guidance:

• 2025 full-year Adjusted EBITDA expected to be flat or marginally positive year-over-year; Q4 EBITDA will be pressured by difficult political advertising comps and some promotional ARPU pressure.
• Total 2025 capital expenditures expected to be approximately $11.5 billion (peak year); some network evolution capex pushed into 2026; combined-company capex expected to decline in first full calendar year post-close.
• Q3 cash taxes $53M; full-year cash tax payments expected to be approximately $1.0 billion.
• Q3 free cash flow $1.6B; management expects rapid free cash flow and FCF per-share growth as CapEx steps down.

Business Commentary:

• Broadband Market Challenges and Opportunities:
• Charter Communications reported a 1% decrease in revenue for Q3 2025, and a 1.5% decline in EBITDA year-over-year.
• The company lost 109,000 Internet customers in Q3, while video customers declined by 70,000.

• These trends are attributed to low move rates, mobile substitution, expanded cellphone Internet competition, and fiber overlap growth, which collectively impacted new customer sales and churn.

• Video Product Improvements and Churn Reduction:

• Charter observed a significant improvement in video customer retention, with losses down to 70,000 from 294,000 in the previous year.

• The improvement was driven by new pricing and packaging strategies, and the inclusion of direct-to-consumer apps with video plans, which led to lower churn.

• Mobile Growth and Customer Retention:

• Spectrum Mobile added 493,000 lines in Q3, marking a 20% growth year-over-year.

• Convergence, with customers purchasing both mobile and Internet products, reduced churn, and profitable mobile lines grew with the adoption of unlimited plans.

• Capital Expenditure and Cash Flow Projections:

• Charter's capital expenditures totaled nearly $3.1 billion in Q3, with expectations for $11.5 billion in 2025, focused on network evolution and CPE spend.
• Despite higher CapEx, free cash flow remained $1.6 billion, with projections for significant free cash flow growth over future years, supported by post-tax savings and continued disciplined capital expenditure.

Sentiment Analysis:

Overall Tone: Neutral

• Mixed results and cautious optimism: management: 'Revenue was down about 1% year-over-year' and 'Adjusted EBITDA declined by 1.5% YoY' contrasted with growth in mobile ('added nearly 500,000 Spectrum Mobile lines in the quarter') and guidance that 2025 EBITDA is expected to be 'flat or marginally positive' and Q3 free cash flow was '$1.6 billion.'

Q&A:

• Question from Craig Moffett (MoffettNathanson LLC): Can you help us think about where broadband is getting better, share data that suggests market share or retention is improving, and why we should be optimistic about improving results given voluntary vs involuntary churn trends?
  Response: Churn is improving especially for converged mobile or video customers and with app activations; current weakness is at the gross-add level due to muted housing/move rates, mobile substitution and new footprint competition (cellular Internet/fiber), but management expects recovery as some macro/competitive pressures abate and from product/marketing improvements.

• Question from Benjamin Swinburne (Morgan Stanley, Research Division): You previously suggested Q4 EBITDA might be less negative than Q3; now it sounds bigger—what changed, will layoffs help/hurt, and do recent pricing comments from Comcast/Verizon change your outlook on broadband/convergence revenue growth?
  Response: Jessica: Certain third-quarter offers pressured ARPU more than expected and are being pulled, which increases Q4 EBITDA pressure; Chris: Charter maintains pricing discipline, retains headroom versus peers and will pass through cost increases when needed, and believes prior product migrations have preserved household economics.

• Question from Vikash Harlalka (New Street Research LLP): Are new promotions (e.g., marketing video as apps-included, broadband nearly free with 4 mobile lines) the next step in your marketing evolution?
  Response: Yes — these are different offer expressions within unchanged national pricing/packaging intended to create win-win scenarios that raise per-household ARPU/margin while saving customers money; the 4-line offer targets a small but high-LTV, low-churn audience and is accretive to average acquisition economics.

• Question from Jessica Reif Cohen (BofA Securities, Research Division): Update on Cox acquisition timing/preparations and color on video product performance (conversion, retention, app engagement)?
  Response: No timing change (still mid-next-year); team is focused on regulatory engagement and integration planning to launch Spectrum pricing/packaging and Xumo in Cox markets post-close; video app activations and the new digital marketplace have accelerated, materially reducing churn in test segments though adoption work continues.

• Question from Michael Rollins (Citigroup Inc., Research Division): Can you size future cost savings from efficiency/AI and any step-function opportunities (IP video migration, automation)? Also, any nonlinear ways to expand addressable market or monetize customer relationships?
  Response: Management sees significant opportunity to lower the ~$8B cost-to-serve via AI/Agentic AI (improved automation, agent tools, reduced truck rolls) over 12–18 months and is actively exploring B2B monetization (edge, offload, authentication, localized data centers) though no single material new revenue today.

• Question from Peter Supino (Wolfe Research, LLC): With rates higher and growth below prior expectations, what would it take for Charter to start paying down maturities aggressively and how do you view target leverage?
  Response: Jessica: Company continually reevaluates target leverage; currently comfortable just under 4.25x pro forma now, targeting 3.5x–4.0x post-close and expects to delever to the middle of that range in 2–3 years, balancing modest borrowing, returning capital to shareholders and sizable forthcoming free cash flow.

Contradiction Point 1

Tax Savings Impact on Free Cash Flow

It involves the impact of tax savings on free cash flow, which is a crucial financial indicator for investors and stakeholders.

Why was Q4's EBITDA decline greater than Q3's? What impact did layoffs have? - Benjamin Swinburne (Morgan Stanley, Research Division)

2025Q3: The tax savings will be significant, potentially adding $0.10 per share in free cash flow annually for the next 6 years. The savings are factored into our investment plans, notably for Cox. - Jessica Fischer(CFO)

Could you clarify the impact of nonpay churn on Internet customer declines and expected cash tax savings for 2026? - John Christopher Hodulik (UBS)

2025Q2: Our tax savings will increase our free cash flow by roughly $0.10 per share annually for the next 6 years. - Jessica Fischer(CFO)

Contradiction Point 2

Broadband Growth Drivers and Churn Reduction

It involves differing perspectives on the key drivers of broadband growth and the impact of media bundling on churn reduction, which are crucial for understanding the company's growth strategy.

Where is broadband improving and why are results optimistic? - Craig Moffett(MoffettNathanson LLC)

2025Q3: Churn is better due to mobile relationships and increased video bundling benefits. - Christopher Winfrey(CEO)

Can you discuss Charter's potential broadband growth in 2025 versus 2024, excluding ACP losses? Chris, can you explain the video product mix shift and its future implications? - Benjamin Swinburne(Morgan Stanley, Research Division)

2024Q4: We're confident about broadband growth, with benefits from no ACP losses. We're sensitive to short-term impacts but expect better visibility this year. Growth drivers include data consumption growth, network evolution, wireless convergence, and seamless entertainment. - Chris Winfrey(CEO)

Contradiction Point 3

Video and Broadband Integration Strategy

It involves the company's strategy for integrating video and broadband services, which is critical for customer retention and acquisition.

Should Charter adjust its outlook on broadband pricing and revenue growth due to recent competitor announcements? - Benjamin Swinburne (Morgan Stanley, Research Division)

2025Q3: Charter's ARPU is low compared to peers, allowing room for pricing adjustments. Promotional pricing has been managed effectively, with migration to Spectrum pricing packages lowering ARPU but maintaining value for customers. - Christopher Winfrey(CEO)

How can you improve video experience and what impact do video attach rates have on broadband? - Jessica Reif Cohen (BofA Securities, Research Division)

2025Q2: Our video strategy focuses on providing flexibility and value, offering expanded packages with included programmer apps. Xumo enhances utility by integrating live TV and apps. - Christopher Winfrey(CEO)

Contradiction Point 4

Impact of Video Improvements on Customer Retention

It highlights differing views on the effectiveness of video product improvements in customer retention, which is essential for maintaining market share and revenue stability.

What updates can you share regarding the Cox acquisition and the impact of recent video product enhancements? - Jessica Reif Cohen(BofA Securities, Research Division)

2025Q3: Video product improvements have increased sales, churn reduction, and programmer app activations, contributing to customer retention and acquisition. - Christopher Winfrey(CEO)

Can you discuss whether Charter can grow broadband results in 2025 versus 2024, considering no ACP losses? Can you comment on how the mix shift in video offerings is occurring and how we should view it moving forward? - Benjamin Swinburne(Morgan Stanley, Research Division)

2024Q4: The new pricing and packaging offer Internet at a lower price and have improved acquisition and retention. - Chris Winfrey(CEO)

Contradiction Point 5

Marketing Strategy and Promotional Impact

It highlights a shift in the company's approach to marketing and promotions, which can directly impact revenue and customer retention strategy.

Why was Q4's EBITDA decline greater than Q3's? What was the impact of layoffs? - Benjamin Swinburne(Morgan Stanley, Research Division)

2025Q3: Our strategy is evolving, focusing on churn reduction, product bundling, video offer pricing and packaging. In mobile, we see continued benefits from our expanded mobile relationships. - Christopher Winfrey(CEO)

Why are promotions and roll-offs effective? Can Life Unlimited plans sustain success in the current market? What is your OpEx outlook for the year? - Ben Swinburne(Morgan Stanley)

2025Q1: We're offering some of the best products in the market at very attractive prices. And we are not aware of any competitor that can beat it. - Christopher Winfrey(CEO)