Charter Communications Q4 Earnings: What's In Store?

Charter Communications CHTR is scheduled to release fourth-quarter 2017 results on Feb 2, before the market opens.

In three of the previous four quarters, the company's bottom line lagged the Zacks Consensus Estimate, with an average miss of 53.32%.

Let's see how things are shaping up prior to this announcement.

Factors Likely to Influence in Q4

Charter Communications' plans to launch wireless services in 2018 are encouraging. The initiative is aimed at retaining customers in this competitive world.Notably, it has inked an agreement with U.S. telecom behemoth, Verizon Communications VZ to operate as a mobile virtual network operator (MVNO). The company will utilize Verizon Communication's wireless network along with its WiFi network to offer mobile services.

Further, the company has plans to execute field trials for the upcoming 5G wireless network. Notably, these trials were backed by spectrum test licenses granted by the FCC.

The twin buyout of Time Warner Cable and Bright House Networks has strengthened the company's foothold in hybrid fiber coax and fiber networks. The company is resorting to various initiatives to improve Spectrum products and cloud-based user interfaces.

Charter Communications has witnessed growth in residential and commercial internet as well as voice customer addition, evident from increase in revenues and subscriber gain. Further, investments in business services division and rollout of several initiatives will drive upcoming results.

Backed by such prospects and latest ventures, the company portrays an impressive price performance. Over the past three months, the stock has returned 16.4% compared with the industry's rally of 13.3%.

Despite such positives, Charter Communications continues to lose subscribers to online video streaming service providers such as Netflix NFLX, Hulu.com, YouTube etc. because of their cheap source of TV programming. In third-quarter 2017, the company lost 1,04,000 video customers in the residential segment. If the subscriber count continues to fall, Charter Communications' video businesses are likely to be at risk. The company's operation in a saturated and competitive multi-channel U.S. video market is a major concern.

Further, gaining customers from competitors is a difficult task as most pay-TV operators are offering innovative packages. Moreover, the U.S. pay-TV industry is affected by the ongoing massive consolidation between telecom and cable-TV operators.

Charter Communications' high debt level is a potential hazard. At the end of the third quarter, the company had $2,164 million of cash and cash equivalents and $68,132 million of outstanding debt compared with $1,535 million and $62,464 million, respectively, in the year-ago quarter. The debt-to-capitalization ratio at the end of the reported quarter was 0.61 compared with 0.54 at the end of 2016.

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