Q4 2016 Real-Time Call Brief

Highlights

We're now past 50 million homes and businesses and serve over 26 million customers.

Since closing, we've been managing the complex process of integrating the three different companies, with over 90,000 employees and a network consisting of or nearly 700,000 miles of physical infrastructure and annual revenue in excess of $40 billion.

On a pro forma basis, we grew our total consolidated customer base by nearly 5% and on our full year 2016 consolidated revenue grew by 7% to over $40 billion and our full year adjusted EBITDA excluding transaction or transition costs grew by 11.8% year-over-year to $14.6 billion.

We generated closed to $7 billion of annual EBITDA less capital expenditures on a pro forma basis.

In 2016, legacy Charter produced customer relationship growth of 6% and residential revenue growth of close to 6%.

In 2017 we're focused on several key goals and priorities.

First is to complete the rollout of our spectrum pricing and packaging in the remaining new markets, we were approximately 50% complete at 12/31.

We are approximately 75% complete as of today and we'll be essentially fully done in residential by the end of March.

In the second quarter, we will restart our all digital deployment featuring fully two way advanced set top boxes to video customers in the approximately 40% of TWC and 50% of Brighthouse that are not yet all-digital.

During the fourth quarter total customer relationships grew by 4.6% year-over-year with 3.8% legacy TWC, 6.1% legacy Charter, and 5.7% as legacy Brighthouse.

As slide 7 shows, we grew residential PSUs by 345,000 versus 917,000 on a pro-forma basis last year.

Over the last year TWC residential video customers declined by 2%.

Video Charter grew its residential video customer base by 1% and Brighthouse lost 2.6% of its residential video customers which is improving.

TWCs video net loss was 159,000 worst than last year with over 70% of the total 105,000 video losses in the quarter driven by Charter's lower value limited basic packages.

Legacy charter continue to perform well in video in the fourth quarter with 20,000 video customer net additions.

Bright House added 34,000 video customers in the quarter.

In total, we lost 51,000 residential video customers in the quarter driven by losses at TWC.

In residential internet we added a total of 357,000 customers in the fourth quarter versus 495,000 last year and from the full year our total residential internet customer base grew by closed to 1.5 million customers or 7.4% with 8.8% growth at Legacy Charter.

In Voice, we grew customers by 39,000 in the fourth quarter versus 304,000 last year.

Over the last year, total pro forma residential customers grew by over 1 million or by 4.2% and residential revenue per customer was up by 1.4% nearly.

Our customer growth combined with our ARPU growth resulted in year-over-year pro-forma residential revenue growth of 6.0%.

Total commercial revenue SMB and enterprise combined grew 11.8%.

SMB revenue grew by 13% and enterprise grew by over 14%.

Fourth quarter advertising revenue exceeded 20% growth year-over-year.

For the full year, advertising revenue ex-political was about flat with 2015.

In total, fourth quarter pro-forma revenue for the company was up 7.2% year-over-year.

TWC revenue grew by 7.5% with nearly half of residential revenue growth from rate increases.

Pre-deal Charter grew by 6.4% driven by continued strong customer growth and Bright House revenue grew by 7.4%.

In the fourth quarter, total operating expenses grew by $259 million or 4.2% year-over-year with transitioned expense accounting for $78 million of our total OpEx this quarter.

Programming increased 6.1% year-over-year.

Turning to regulatory, connectivity, and produced content expense, these direct costs were up 3.7% year-over-year.

Cost to service customers grew by 1% despite overall customer growth of 4.6%.

Marketing expense declined by 5.5% year-over-year in the quarter.

Other expenses grew by 6.1%.

Adjusted EBITDA which excludes non-cash share-based compensation grew by 12.7% in the fourth quarter and excluding transition costs in both years, adjusted EBITDA grew by 14.3%.

We have identified over $115 million of hard transaction synergies realized within the fourth quarter and in 2016 in other words for May, we realized over $300 million in hard synergies.

We continue to expect over $700 million in run rate transaction synergies at the first anniversary of the closing for our transactions and I believe will exceed $1 billion in synergies after three years been closed.

2016 revenue benefited from both political ad revenue and large price increases at legacy TWC.

Excluding those impacts, year-over-year revenue growth on a pro-forma basis would have been slower and closer to 4.5%.

flowing through the high margin that translates to over 5% of our 11.2% EBITDA growth in 2016.

We generated $454 million in net income attributable to Charter's shareholders in the fourth quarter versus $130 million on a pro forma basis last year with the growth driven by higher adjusted EBITDA and pension gains of $366 million primarily due to the positive impacts that rising interest rates have had on our accumulated benefit obligation.

We also had a $73 million gain on financial instruments from currency Capital expenditures totaled $1.89 billion in the fourth quarter, including $187 million of transition spend.

Excluding transition CapEx, fourth quarter CapEx declined by $81 million year-over-year or 4.5%.

For the full year 2016, our capital expenditures totaled $7.5 billion or $7.1 billion when excluding transition spending.

We generated $1.86 billion of free cash flow in the fourth quarter versus $80 million of actual not pro-forma free cash flow in the fourth quarter of last year.

On a pro forma basis, adjusted EBITDA less CapEx grew by 24% in the fourth quarter and for the full year, that figure grew about 15%.

We finished the year with $60 billion in debt principle and our run rate annualized cash interest expense is $3.3 billion whereas our P&L interest expense adjusted $2.9 billion annual run rate.

At the end of the fourth quarter our total net debt to last 12 month pro forma adjusted EBITDA was 4.0 times.

Our long-term target leverage remains at remains at 4 to 4.5 times.

On a like-for-like basis, the cumulative refinancing should save us over $40 million in interest cost per year.

During the fourth quarter, we repurchased 4.0 million shares, Charter shares in the open market, totaling $1.1 billion at an average price of $265 per share including the advanced new house transaction in late December, where we repurchased 750,000 common units, we we repurchased a total of 4.8 million shares and common units during the quarter.

For the full year 2016, we repurchased 5.8 million shares in common units for close to $1.6 billion or about 2% of our combined total shares.