Tear Sheet: Charter Communications Inc.'s Base Case Updated To Include Impact From ACP

We project Charter Communications Inc.?s EBITDA will decline slightly in 2024 from a combination of customer churn (600,000), customer discounts that temporarily pressure average revenue per user (ARPU; $10 for retained ACP customers), and mobile promotions to retail customers. We believe Charter will likely recover from this one-time event and return to 3%-4% EBITDA growth in 2026 and beyond as mobility more meaningfully contributes to earnings. Given Charter?s cushion relative to our downgrade trigger of 5x, we do not expect tighter triggers would result in a rating change. Although we view footprint expansion favorably, we are mindful of the potential for it to mask some weakening in competitive position in current markets if we focus exclusively on EBITDA trends as

...April 19, 2024 We expect a manageable impact from the expiration of the Affordable Connectivity Program (ACP). We project Charter Communications Inc.'s EBITDA will decline slightly in 2024 from a combination of customer churn (600,000), customer discounts that temporarily pressure average revenue per user (ARPU; $10 for retained ACP customers), and mobile promotions to retail customers. We believe Charter will likely recover from this one-time event and return to 3%-4% EBITDA growth in 2026 and beyond as mobility more meaningfully contributes to earnings. Not directly related to ACP, we could tighten our rating triggers near term due to heightened competition. Given Charter's cushion relative to our downgrade trigger of 5x, we do not expect tighter triggers would result in a rating change. Although we view footprint expansion favorably, we are mindful of the potential for it to mask some weakening in competitive position in current markets if we focus exclusively on EBITDA trends as a proxy...

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