Charter: Solid Progress in Q1 After Shares Collapsed in 2022

Company Update (CHTR US) (Buy)

Highlights

• Q1 results show Charter’s business is on the mend

• Residential Internet revenues grew 4.9% year-on-year

• EBITDA should accelerate in H2 as we lap cost increases

• Excluding rural CapEx and one-offs, FCF Yield exceeds 10%

• We see 85% upside (25.8% p.a.) by 2025 year-end. Buy

Introduction

We review Charter after Q1 2023 results were released last Friday (April 28).

Charter shares have rebounded 20% from their October 2022 low, though their path has been volatile and they remain 46% lower than at 2020 year-end:

Charter Share Price (Last 1 Year)

Source: Google Finance (03-May-23).

Q1 2023 results showed that Charter’s growth has reaccelerated. Residential Internet revenues grew 4.9% year-on-year and 1.4% from Q4; excluding low-margin Video, total Residential revenues grew 5.7% year-on-year and 1.7% from Q4. Charter’s Internet subscriber count grew by 0.2% (76k) in Q1, while its Mobile lines grew by 13% (686k). Adjusted EBITDA grew just 2.6% year-on-year, but should accelerate in H2 as we lap …