Charter Communications has reported results for the second quarter that significantly exceeded expectations, primarily driven by a remarkable surge in revenue from residential mobile services. This robust performance has led to a substantial increase in the company's stock price, illustrating investor confidence. For the quarter ending June 30, Charter's earnings rose to $8.49 per share, up from $8.05 during the same timeframe the previous year.
Revenue for the quarter also saw a slight increase, climbing 0.2% to reach $13.69 billion. Analysts had previously predicted earnings of $7.90 per share with total revenues of $13.6 billion, underscoring the company’s positive performance against market forecasts. The standout factor in this quarter's results was the extraordinary 37% increase in revenue from residential mobile services.
This surge can be attributed to growth in mobile line adoption along with a higher allocation of bundled service revenues. In terms of residential internet services, revenue experienced a modest growth of 1.3%, driven in part by promotional rate increases and adjustments made to the pricing structure.
During this quarter, the company added 557,000 new mobile lines for residential and small- to medium-business sectors. However, there was a decline of 149,000 internet customers, primarily in the residential segment, as reported by the broadband connectivity service and cable operator that is well-known for its Spectrum brand. Jessica Fischer, Chief Financial Officer of Charter, highlighted the significance of the results during an earnings conference call.
"This quarter, for the first time, our standalone mobile adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was positive, despite the challenge posed by subscriber acquisition costs and the absence of GAAP revenue allocation to mobile revenue," she stated, according to insights compiled by Capital IQ.
Fischer emphasized that this newfound mobile profitability signifies a critical milestone for the company and indicates that Charter is on track to establish a highly profitable mobile business. In terms of stock market response, Charter's shares experienced an impressive surge of nearly 17% during trading on Friday, reflecting the enthusiasm of investors regarding these promising results. However, not all segments showcased positive trends.
Charter's second-quarter video revenue experienced a decline of 7.7% year over year, and the company's voice services revenue decreased by 4.2%. Fischer mentioned that the company's internet revenue was adversely affected by approximately $30 million, attributed to one-off items associated with the government's Affordable Connectivity Program (ACP), which was aimed at making broadband more affordable for internet and mobile customers.
Notably, the program's connections came to an end in early February. Fischer also addressed the retention of customers under the ACP, indicating that while the performance remains strong, the significant driver behind the anticipated internet customer losses that will be seen in the third and fourth quarters is tied to non-pay disconnections.
Fischer suggested that these losses would be more pronounced in the third quarter. As for their consolidated adjusted EBITDA for the second quarter, Charter recorded a year-over-year increase of 2.6%, totaling $5.67 billion. CEO Chris Winfrey remarked, "We are seeing growth in EBITDA despite the challenges posed by the loss of the ACP and subsequent competitors, by enhancing our efficiency without compromising our service and sales capabilities." In the realm of customer metrics, Charter experienced a decline of 393,000 residential video customers in the second quarter compared to a drop of 189,000 from the previous year.
Additionally, residential wireline voice customers fell by 268,000, a slightly higher decline than the 225,000 noted during the prior year. Looking ahead, Charter has revised its full-year capital expenditure projections to nearly $12 billion, a reduction from the previously expected range of $12.2 billion to $12.4 billion.
This change has been attributed to lower net additions in internet and video customer metrics, exacerbated by the conclusion of the ACP. Charter positions its internet services as "faster and more reliable," with competitive pricing when bundled with mobile services. Winfrey commented on the future, stating, "We anticipate that market activity and selling opportunities will gradually increase, and traditional cell phone companies will encounter challenges as customer demands for bandwidth continue to escalate.".