Despite fewer sales opportunities, Charter Communications still managed to grow its broadband and mobile subscriber base while keeping pay-TV losses in check in the second quarter of 2021.

Charter added 400,000 broadband subs (365,000 residential and 35,000 business) in the quarter, extending its total to 29.63 million, and beating expected additions of about 307,000. The Q2 2021 result was well off the 850,000 adds in the pandemic-fueled year-ago quarter, but soundly beat additions of 258,000 in the corresponding, pre-pandemic period of Q2 2019.

Charter estimated that about 60,000 of its residential Internet net adds were derived from the FCC's Emergency Broadband Benefit (EBB) program, which provides a temporary $50 to $70 discount on broadband bills for eligible households. The FCC announced this week that more than 4 million households have enrolled in EBB so far.

No rush on "high-split" upgrades

Charter was asked about its plans for network upgrades, including "high-splits" that would vastly expand the amount of spectrum dedicated to the upstream on its hybrid fiber/coax (HFC) plant.

Chris Winfrey, Charter's CFO, noted on Friday's call that the operator has yet to announce a definitive plan regarding high-splits or network upgrades to 1.2GHz to help accommodate such moves. But he stressed that any activity in those areas would likely have no material impact on Charter's capital expenditures for 2021.

"If and when we do move into high-split territory, it's not going to be like you're going to flip the switch nationally; you'll start off market by market," he explained.

Tom Rutledge, Charter's chairman and CEO, said a high-split would enable Charter to sell symmetrical data speeds of 1 Gbit/s or more without a lot of incremental capital spending. But he said there's no rush to head in that direction based on most customer use cases. "We don't need it yet from a marketing perspective," he added.

Mobile momentum slows in Q2

Charter's Spectrum Mobile business added another 265,000 lines (250,000 residential and 15,000 business), down from additions of 325,000 in the year-ago quarter, due partly to the aforementioned slowdown of overall cable sales activity. Analysts were expecting Charter to add 292,000 mobile lines in the period.

Charter ended Q2 2021 with 2.94 million mobile lines. Mobile revenues climbed 67.5%, to $519 million.

Charter declined to say what percentage of sell-ins include mobile, but Winfrey said that the operator's success rate is going up. Additionally, mobile is tied into all conversations with new customers and is being used as a retention tool, he added.

Rutledge offered a small update on Charter's planned rollout of CBRS spectrum to help offload mobile traffic in high-use areas. Charter's first CBRS infrastructure project won't be active until early next year, and the company doesn't anticipate generating any "meaningful national offload" from CBRS until the start of 2023, he explained.

"Even if we were not using CBRS, we have an opportunity, just through our volume of activity, to continually move down the price curve," Rutledge said. "We're optimistic about our ability to grow our mobile business and, at the same time, take costs out of our mobile business as it grows."

Rutledge hesitated to take another guess on how much traffic Charter could offload with its CBRS deployment on today's call, but did suggest in January that Charter could be in position to offload up to a third of its traffic within four or five years.

"Flex" talks still alive, but...

Turning to video, Charter lost 50,000 customers (-63,000 residential against +13,000 business), lowering its total to 16.01 million, but the losses were better than the -125,000 expected by analysts. Charter added 94,000 video subs in a year-ago period that was marked by explosive broadband subscriber growth that helped to drive bundles that included pay-TV.

"To some extent our video business is stabilizing," Rutledge said. But he acknowledged it remains a "difficult business" due to an ongoing rise in programming costs that are pricing some consumers out of the market.

Meanwhile, there appears to be little movement regarding discussions between Charter and Comcast about a potential licensing deal for technology that powers Xfinity Flex, Comcast's streaming product for broadband-only customers.

Those talks surfaced more than two years ago, and there's no indication that the sides have gotten any closer to an actual deal.

"We continue to engage with Comcast on discussions about their Flex technology and what it might be capable of doing for us," Rutledge said.

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— Jeff Baumgartner, Senior Editor, Light Reading