(Bloomberg) -- Charter Communications Inc. shares surged after the cable and internet giant reported losing fewer broadband subscribers than analysts expected in the third quarter despite the end of a federal internet subsidy program.
The company reported 113,000 fewer home broadband internet customers in the three months ending Sept. 30, beating estimates for a loss of 248,000. Charter, which operates the Spectrum brand, parted ways with 281,000 home video customers compared with estimates for losses of 368,000, according to data compiled by Bloomberg.
Charter shares jumped as much as 17% Friday morning in New York to $382.46, wiping out losses for the year.
Charter had been the most vulnerable to the end of the government’s Affordable Connectivity Program, which offered subsidized internet access during the pandemic. The company had about 5 million such subscribers, according to Bloomberg Intelligence. The program ended in April.
Charter is fighting competition from Verizon Communications Inc. and T-Mobile US Inc., which are siphoning off home internet subscribers, and an industry-wide shift among consumers from pay-TV to streaming. The traditional cable and telecom businesses are both moving toward a “convergence” model, where they can offer internet, mobile phone and content packages to subscribers.
Broadband losses for cable providers like Charter and Comcast Corp. are likely to begin leveling off next year alongside slowing growth for fixed wireless service offered by the telecom giants. At the same time, Charter and Comcast have found success in selling their own mobile plans to customers. Charter added 545,000 new mobile lines in the quarter and Comcast reported 319,000 new wireless customers on Thursday.
Overall, revenue at Stamford, Connecticut-based Charter rose 1.6% to $13.8 billion in the third quarter, beating analysts’ projections of $13.7 billion. Earnings before interest, taxes, depreciation and amortization rose 3.6% to $5.6 billion, in line with expectations, while earnings per share were $8.82.
Charter is planning a major marketing push next year to promote more than 10 streaming services it will offer at no additional cost to customers — launching an ambitious strategy to head off cancellations and attract new subscribers. It’s also increasing efforts on bundling strategies for internet, voice and video packages that can help curb losses from cable programming customers.
In September, Charter announced a revamped pricing structure that allows customers to pick price-guaranteed bundles, including a $30 internet plan with two mobile lines and Spectrum Video service.
“We already see a significant uplift in the video sell-in just from the way that we’re bundling and going to market with this new Spectrum pricing and packaging,” Chief Executive Officer Christopher Winfrey told investors on a call. He emphasized that the company is “not forecasting video growth. We’re simply saying that it’s a way to add utility into our seamless connectivity relationships in a way that hasn’t existed.”
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