Charter Communications added 400,000 residential and business broadband subscribers in Q2, beating analysts’ consensus estimates by about 125,000 subscribers and indicating that the expected slowdown in broadband growth may not be as dramatic as first expected.

Charter’s 400,000 total broadband additions was well ahead of consensus estimates of 275,000 adds, and was driven in part by lower churn. That lower churn rate also was evident on the video service side, where Charter lost 63,000 customers, again besting consensus estimates of a loss of about 160,000 customers.

Also Read: Analysts Brace for Broadband Slowdown 

Officially, Charter added 365,000 residential broadband customers (consensus estimates were for 250,000 additions) and 35,000 business broadband adds. Mobile customers rose by 265,000, slightly less than expectations of around 290,000 additions. Charter ended the period with about 2.9 million mobile customers.

Those gains helped drive overall revenue up 9.5% to $12.8 billion and cash flow increased 11.8% to $5 billion.   

Charter’s performance mirrored that of its closest peer -- No. 1 cable operator Comcast -- which added 354,000 broadband customers in Q2, well ahead of consensus estimates. 

"Our operating strategy continues to deliver strong customer and financial growth despite an  operating environment that has yet to return to normal," Charter chairman and CEO  Tom Rutledge said in a press release. "And the opportunity at Charter is what it has always been — to continue to create customer  relationships with our high-quality connectivity services, delivering value for consumers and our  shareholders over time." 

Altice USA’s recent acquisition of a regional fiber-optic broadband service provider helped offset organic customer losses in the second quarter, as revenue rose 1.7% to $2.52 billion and cash flow growth was flat at $1.1 billion in the second quarter. 

Altice said unique customer relationships were down by 12,000 in the period, but showed a gain of 23,000 unique customers when 35,000 subscribers from its most recent acquisition -- Morris Broadband -- is included. Altice USA purchased Morris broadband in April in a deal that valued the North Carolina company at $310 million. 

Organic broadband subscriber growth was flat in the period, but increased to a gain of 30,000 customers when Morris Broadband data was included. That compares to a gain of 70,000 broadband subscribers in the prior year. 

The same held  true for video customer losses -- down 48,000 organically in Q2, or 36,000 when Morris Broadband’s 12,000 video customers are considered. Altice USA lost 35,000 video subscribers in Q2 2020.

Also Read: Analysts Brace for Broadband Slowdown 

Residential revenue growth was spurred by a 7.8% rise in broadband sales and a 36.4% spike in News & Advertising revenue, supported by a strong recovery in local, regional and national advertising plus additional political advertising revenue from the New York mayoral and New Jersey  gubernatorial races.

At its Optimum Mobile service -- which was rebranded earlier this month  -- revenue rose 4% to $20.7 million as the company added 5,000 new customers. Optimum mobile ended the period with 180,000 customers, reaching about 3.8% of Altice USA’s residential customer base. 

Altice USA said that broadband-only customer usage averaged about 558 Gigabytes per month in Q2, a 26% increase and that the average broadband speed taken by customers has nearly doubled over the past three years to 316 Megabits per second in Q2. More than half of its broadband customers subscribe to speeds of 200 Mbps or less, representing an opportunity to upsell to faster service, the company said. 

Altice USA said it continues with its fiber-to-the-home upgrade plans, adding that at the end of the quarter it covered about 1.1 million homes with FTTH technology available for service. FTTH sell-in to new customers is at about two-thirds of net additions in areas where the technology is available, the company said.  Penetration of FTTH passings grew to 4.3% compared to 1.0% in Q2 2020. 

Altice said it also is moving forward with its edge-out program, adding 127,000 homes passed in the quarter (39k homes passed excluding Morris Broadband) and 315,000 homes passed in the past twelve months (160,000 homes passed excluding the acquisitions of Morris Broadband and Service Electric Cable T.V. of New Jersey). 

“As the states and businesses in which we operate have been reopening more widely, Altice USA has seen an acceleration in revenue growth led by advertising and business services,” CEO Dexter Goie said in a press release. “Our residential business remains extremely focused on achieving faster broadband customer growth going forward from a faster pace of footprint expansion and network upgrades including fiber. We are delighted to have announced recently the new Optimum Mobile brand as the first step in the company’s plan to align all its connectivity brands under one national Optimum brand, and we continue to invest in innovative new products such as Optimum Stream to support increased video streaming activity which is driving broadband data usage.”

With the three top publicly traded cable operators expected to report second quarter results later this week, all eyes will be on whether the slowdown in broadband subscriber growth will be larger than, less than or equal to expectations.

Cable broadband growth broke records in 2020, as the pandemic forced most Americans to work from home and buy faster and faster tiers of service. The expansion of streaming video, as services like Disney Plus, HBO Max, Paramount Plus and Discovery Plus chewed up bandwidth normally occupied by SVOD stalwarts like Netflix, Amazon Prime Video and Hulu, also increased demand. 

When the dust cleared, cable operators added about 5.6 million broadband customers in 2020, more than double the 2.5 million added in the previous year. Most operators warned that subscriber growth would slow this year and probably next, most likely to 2019 levels. That appeared to hold true in the first quarter, when total cable broadband additions were about 3.8 million, according to Wells Fargo Securities media analyst Steven Cahall.

In a research note, Cahall added that as Q2 is usually a seasonally weaker period, overall broadband growth is expected to be at about 0.6%. He noted that while this is a 400 basis point decline from the previous quarter, it would still be the highest Q2 growth rate in five years (excluding 2020). 

Cahall is one of the more bullish analysts regarding broadband growth, noting that the segment outpaced expectations in the first quarter, as many operators said trends associated with COVID-19 continued. While Cahall still expects a deceleration in growth for the full year in 2021 (3.5%, compared to 5.6% in 2020), he notes it is still higher than the growth rate in the prior four years. 

“Commentary from most of our covered companies suggests subscriber gains similar to 2019 levels, with a back-half weighted growth profile,” Cahall wrote.

Altice USA is the first major publicly traded operator out of the box, expected to report its Q2 results on July 28 after the market closes. Analysts are expecting the operator to add between 10,000 and 28,000 broadband customers in the quarter, compared to Q1 2021, when it signed on about 12,000 high-speed internet customers.

Altice USA, which operates as Optimum in its East Coast markets and as Suddenlink Communications in the Midwest, has some of the highest broadband penetration rates in the industry, which has limited its subscriber growth in the past. Earlier this month the company said it would rebrand its wireless service as Optimum Mobile across all of its systems, a move it said was the first step in rebranding all of its products under the Optimum name. 

Also Read: Analyst: After a Strong 2021, Cable’s Broadband Trajectory Could Reverse in 2022 

At Comcast, which is scheduled to report its Q2 results on the morning of July 29, analysts believe that broadband additions could come in at nearly half the level the company reached in Q1. Cahall estimates that Comcast will add about 260,000 residential broadband customers in Q2, while Evercore ISI Group media analyst Vijay Jayant and Bernstein media analyst Peter Supinio are in agreement that Comcast should add about 275,000 residential and commercial broadband customers in the period. Still, that’s nearly half the 461,000 residential and commercial additions the company added in Q1.

Charter is expected to release its Q2 results on July 30, and Supino, who downgraded the stock to “market perform” on July 12, expects the nation’s second largest cable operator to add about 250,000 broadband customers. That is about in line with Cahall’s estimate of 246,000 additions. Jayant predicts the company will add about 265,000 high-speed data customers in the period. 

For the full year, analysts are pretty much in agreement that growth will be slower than in 2020, with some predicting it could be even less than in 2019. 

MoffettNathanson expects the top three operators to add about 2.4 million broadband customers in 2021, around half a million subscribers behind the 2.9 million they added in 2019. Supino estimated that overall growth would be about 2.7 million. Supino predicted that Charter would have the biggest drop in growth over the next two years -- he estimated the company would add about 1 million broadband subscribers in 2022 and under 1 million in 2023 -- spurred by expected increased regulatory scrutiny and stepped up competition from AT&T and T-Mobile.

T-Mobile has said it expects to add 7 million to 8 million 5G wireless broadband customers by 2025, implying additions of about 1.5 million annually. While Supino wrote that wireless broadband can’t match fiber-to-the-home, he believes a new segment is emerging in the market. 

“Consumer markets naturally segment ‘good, better, best,’" Supino wrote. “Historically, the enormous up-front capital costs and logistical challenges of supply growth have inhibited the segmentation of the broadband market. We believe the natural segmentation of the broadband market will provide more consumers with an opportunity to pay a lower price for ‘good enough’ broadband.”

Charter Communications kept up the pace of Q1 broadband and wireless customers additions set by Comcast, reporting 355,000 high-speed data and 300,000 mobile subscriber adds in the period.

Both Comcast and Charter had cautioned investors not to expect the same growth the companies experienced in 2020, when pandemic-fueled stay at home orders drew record broadband growth. Better to compare this year to 2019, they said, and so far, that has proven to be a prudent choice.

Charter’s 355,000 data additions were behind the 582,000 it added in Q1 2020, but were closer to the 428,000 additions in the same period in 2019. Wireless customer adds of 300,000 were higher than the 298,000 customers added in Q1 2020, and nearly double the 176,000 additions in Q1 2019. Video subscribers declined by 138,000, more than the 70,000 lost in Q12020, but inline with the 145,000 shed in 2019. 

Also Read: Charter's 'Giffen Good'

Charter’s 355,000 data additions were behind the 582,000 it added in Q1 2020, but were closer to the 428,000 additions in the same period in 2019. Wireless customer adds of 300,000 were higher than the 298,000 customers added in Q1 2020, and nearly double the 176,000 additions in Q1 2019. Video subscribers declined by 138,000, more than the 70,000 lost in Q12020, but inline with the 145,000 shed in 2019.  

The broadband and wireless gains drove a 6.7% increase in total revenue to $12.5 billion, and a 12.5% increase in adjusted EBITDA to $4.9 billion.

“We continue to execute well in a market environment that has not yet returned to normal,” Charter chairman and CEO Tom Rutledge said in a press release. “We added 355,000 Internet customers in the first quarter, and 2 million over the last year, for year-over-year growth of 7.3%. "Our value-driven operating strategy of providing multiple high-quality products at lower prices than sold individually continues to drive our growth.”

Residential video and broadband subscriber metrics at Altice USA were basically in line with analysts expectations in Q1, while the company managed to squeeze out 1.2% revenue and 4.2% cash flow growth in the period. 

Altice USA added about 12,000 broadband customers in Q1, slightly less than the 13,000 some analysts predicted. The company shed about 54,000 video customers in the quarter, compared to the 56,000 losses predicted by some analysts. Overall revenue was up 1.2% to $2.5 billion and cash flow grew a healthy 4.2% to $1.1 billion. 

The subscriber growth was behind last year, when the pandemic was at its height and stay-at-home orders drove record growth in broadband. For Altice USA, one of the most heavily penetrated cable operators in the country, it added about 142,000 broadband customers in 2020 and lost about 237,000 video subscribers for the full year. 

Also Read: Altice USA Chief Says M&A 'Definitely’ on the Agenda

Analysts have been expecting growth to slow down this year after last year’s gains. In a research note, Wells Fargo media analyst Steven Cahall wrote that he expected broadband growth to be the big story for Altice USA during the quarter and the year. 

“The company will have to prove that it can continue to grow organically for investors to fully back the capital return story,” Cahall wrote. “If growth is tracking well then [Altice USA] is a [free cash flow] narrative at a 12% [free cash flow] yield. If growth stalls then that becomes the narrative.” 

In a press release, Altice USA CEO Dexter Goei said he was pleased with the results, which he added, position it well for the rest of the year.  

“We continue to see increased demand for broadband and higher speeds as we accelerate our best-in-class network performance through our investments in fiber and enhance our product offerings,” Goei said in the press release. “Our team's ongoing commitment to serving our customers continues to be reflected by our strong broadband customer results and financials in the quarter. Furthermore, we delivered best-ever first quarter free cash flow performance, supporting an incremental $523 million in share repurchases. Earlier this month we closed our Morris Broadband acquisition, and we continue to look for opportunities to expand our footprint to complement our numerous organic growth opportunities, including accelerated new builds and fiber upgrades."

CuriosityStream said it finished the year with 15 million subscribers, up 50% from 2019, as full year revenue at the factual streaming service more than doubled to $39.6 million. 

Fourth quarter revenue at CuriosityStream was $11.4 million, compared to $6.7 million in the prior year. Net loss was slightly higher at $15.7 million in the period, compared to a loss of $14.6 million in the prior year. 

CuriosityStream went public in October after being purchased by special purpose acquisitions company (SPAC) Software Acquisition Corp. in a deal that valued the streaming service at about $331 million. Its stock, traded under the symbol “CURI,” closed at $16.47 each on March 23, down 60 cents each or 3.5%. Shares were up by 11 cents each in after-hours trading to $16.58.

Also Read: CuriosityStream Looks Ahead 

Full year revenue more than doubled from $18 million to $39.6 million, while the net loss for the year improved to $38.6 million, compared to a loss of $42.5 million in 2019. The company said it expects 2021 revenue to rise by about 80% to at least $71 million. 

“We had a strong 2020, ending the year with more than double our 2019 revenue with approximately 15 million subscribers,” CEO Clint Stinchcomb said in a press release. “More recently, we raised approximately $100 million in a follow-on offering completed in February of this year. We enter 2021 with a strong balance sheet, one of the largest libraries of factual content in the world and a world-class team of experienced media executives executing strongly against our plans. I couldn’t be prouder of what we accomplished in 2020, and I look forward to 2021.”

TiVo CEO Dave Shull told equity analysts that the company has made “good progress” in its bid to separate its IP licensing business from its products and technology group, and that the split should be executed by April of next year.

“The company is actively interviewing candidates to fill out the management teams of both companies, standing up separate systems, and working with the IRS and the SEC to prepare for separation,” Shull said during TiVo’s third-quarter earnings call Thursday. (A transcript of Thursday’s call was made available by Seeking Alpha.)

For the third quarter, TiVo reported a 4% revenue decline to $158.5 million, with revenue from its products business falling 12% to $82.8 million. IP licensing revenue increased 8% to $75.7 million.

In regard to the latter side of TiVo’s business, Shull said he expects Comcast to eventually capitulate amid the sprawling patent dispute between the two companies. Offering an update to shareholders, Shull said the International Trade Commission will issue its final determination on the second round of TiVo’s patent disputes on December 16. TiVo’s third ITC case against Comcast will unfurl from January 17-21, he added, with an administrative law judge’s initial determination due June 29 and final determination due October 29 of next year.

Meanwhile, Shull remarked on TiVo+, the streaming service the company launched a month back.

“TiVo+ is a big first step for us, because this is not historically a content company,” Shull said. “This is a company that’s been designing hardware. So for us to shift and say we can actually deploy a bunch of content ads on that’s the TiVo+ brand is a big step.”

Roku volatile stock shot up 8.5% in after-hours trading after the company reported a 51% jump in first-quarter revenue to $206.7 million. Analysts had expected revenue to come in at around $189 million.

In a Q1 report overflowing with good news for the now diversified OTT company, advertising revenue was up to $134.1 million compared to $75 million a year ago.

Hardware sales increased to $72.5 million from $61.5 million.

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Roku now has 29.1 million active accounts on its ecosystem. And it has overtaken Samsung as the most widely distributed smart TV user interface.

“Roku had an outstanding first quarter,” the company said in its letter to shareholders. “The strength of our brand, the scale of our active account base, the advantages of our purpose-built streaming OS, and the engagement of our users make Roku an increasingly important partner for content publishers, advertisers and TV manufacturers.”