'We don't have to do CBRS to make mobile work,' says Charter CEO

Targeted Citizens Broadband Radio Service (CBRS) deployments will play an important role in Charter Communications' wireless/mobile network strategy. But they are not sizing up as the most critical piece of the puzzle as the company looks to improve mobile margins and, eventually, have Spectrum Mobile turn a profit.

"We don't have to do CBRS to make mobile work," Tom Rutledge, Charter's chairman and CEO, said Friday on the company's fourth quarter 2021 earnings call. "Margins will improve regardless."

That said, CBRS is factoring in as Charter aims to deploy the spectrum in targeted, high-use areas that will help it offload costs associated with its Verizon MVNO deal. Charter, which came away with 210 licenses in the 2020 CBRS spectrum auction, is rolling out CBRS in one yet-to-be-disclosed market.

Figure 1: Mobile is a small but growing part of Charter's revenue stream.
Click here for a larger version of this image.

Rutledge reiterated that CBRS could help Charter offload about 30% of its mobile traffic and build on the "enormous amounts" of offload traffic it's already generating today from its Wi-Fi network.

"When we talk about a full market deployment [of CBRS], we talk about a full market deployment where it makes sense," Rutledge said. "We're putting these radios where traffic dictates where the radios should be, and that the amount of offload will reduce our costs sufficiently to pay back the investment in the radios."

"Quickly," added Chris Winfrey, Charter's COO.

Bigger picture, the targeted use of CBRS is designed to increase margins and beef up the overall value of Charter's mobile business.

"We will grow profitability by adding CBRS and by growing the offload," Jessica Fischer, Charter's CFO, said. She noted that CBRS will play an important role in the EBIDTA growth story for Spectrum Mobile.

Comcast's mobile business, which also leans on a Verizon MVNO deal, was profitable for full-year 2021. Charter's not there yet – its mobile business generated an EBIDTA loss of $92 million in Q4 2021, roughly the same as the year-ago period, and an EBIDTA loss of $311 million for all of 2021.

Record mobile line additions

But the subscription and revenue pieces of Spectrum Mobile are ramping up. Charter added a record 380,000 mobile lines in Q4 2021, lifting its grand total to 3.56 million, crushing analyst expectations of a gain of 284,000. Charter added 315,000 mobile lines in the year-ago period.

Figure 2: Click here for a larger version of this image.

Charter, which launched Spectrum Mobile in 2018, attributed the subscriber surge in part to its recent introduction of multi-line pricing and its initial deployment of a new, more integrated billing system designed to accelerate and simplify the mobile sales process.

Charter's mobile business generated revenues of $632 million, up from $428 million in the year-ago period. Wireless accounted for 4.8% of Charter's total revenue in the quarter.

"Up to now, investors have treated Cable wireless as something closer to a hobby than a real business…Charter's quarterly report, with a whopping 380K wireless net adds in the quarter, will perhaps go a ways towards changing that perception," Craig Moffett, analyst at MoffettNathanson, said in a research note issued today after Charter's financial results. "Wireless alone is contributing 1.6 percentage points to Charter's growth rate, and they're just getting started."

Charter's mobile business is growing amid a recent slowdown in broadband subscriber growth – Charter added 190,000 broadband subs in Q4, down from a gain of 246,000 in the year-ago period.

Charter's been expanding its wireless base without device subsidies and giveaways. "If we need to change our competitive posture, we can," Rutledge said. "I think what we're doing right now is the best strategy for us."

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— Jeff Baumgartner, Senior Editor, Light Reading