Charter aims for $2 billion in cost savings in a bid to return to a growth trajectory

Reuters, November 6 - Charter Communications Inc.CHTR.O said on Friday it will cut $2 billion in annualized operating costs over the next 18 months and overhaul its sales and operations model in a bid to reinvigorate its growth momentum.

The company's stock fell more than 5% in premarket trading. As of Thursday's close, its stock had fallen 39.7% so far this year.

Charter said it will realign its marketing and sales strategies for its core internet services and place greater focus on mobile and video products to increase subscriber numbers and boost retention rates.

These savings are in addition to the more than $1 billion in synergies expected from its acquisition of Cox Communications (link), which was completed on August 19.

This $34.5 billion transaction, including debt, merged two of the largest U.S. cable and broadband operators to jointly compete against streaming companies and mobile carriers vying for customers.

Charter's cable television business faces competition from streaming services such as Netflix NFLX.O and Disney+ DIS.N.

In the broadband sector, carriers including Verizon (VZ.N) and T-Mobile (TMUS.O) are aggressively promoting fixed wireless services—which deliver home internet access via mobile networks—to win customers away from cable operators.

On an adjusted basis, Charter lost 233,000 internet subscribers in the third quarter, compared to a loss of 171,000 in the same period last year; video subscribers fell by 77,000, versus a decline of 121,000 a year ago.

Reuters reported on Tuesday (link) that India's billionaire Mukesh Ambani’s Jio Platforms has held talks with Charter and Comcast CMCSA.O about licensing its wireless broadband technology in exchange for potential stakes in the two U.S. companies.

According to LSEG data, Charter reported third-quarter revenue on Friday of $14.9 billion, below analysts' average estimate of $15.03 billion.

The company posted a net loss of $20.50 per share, compared with a profit of $8.50 per share a year ago, mainly due to a $6.3 billion franchise impairment charge.

As of the end of September, the company had total debt of $108.6 billion and cash reserves of $573 million.

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