Cable Providers Looking to Trim Down on Expenses

Wireless ProviderIn recent news, Charter Communications® is said to be planning to spend $2 billion lesser on capital improvements this year. This comes in the aftermath of its decision to charge its broadcast and TV customers a higher amount.

“We currently expect capital expenditures, excluding capital expenditures related to mobile, to be approximately $7 billion in 2019, versus $8.9 billion in 2018,” Charter® said in an official announcement. “Our expectation for lower capital expenditures in 2019 versus 2018 is primarily driven by our expectation for lower customer premise equipment spend with the completion of our all-digital conversion [and] lower scalable infrastructure spend with the completion of the rollout of DOCSIS 3.1 technology across our footprint.”

The leading wireless provider of the country has almost finished integrating Bright House and Time Warner Cable®. The company acquired the two in 2016. “2019 is the year we’ll see a significant reduction in capital intensity,” Charter’s CEO, Tom Rutledge, commented in an earnings call. In fact, a year ago, Charter® executives had assured its investors a considerable drop in capital intensity in 2019.

The Telco reported that its cable capital expenditure out of cable revenue reduced from 20.9% in 2017 to 20.4% in 2018. This value is expected to drop further, as the company cuts down on its cable capital costs while raising its revenue.

Cable ProvidersWhere the best cable providers in the country were expected to decrease the costs, Charter® hiked its prices in all of its 41-state cable territory back in November. This has a big repercussion for the customers who subscribe cable TV service and broadband. It could amount to $91 additional expense for individual customers.

The company announced that its income per customer was $111.78 a month in the 4th quarter, which showed a rise of 0.9% from 2017. It also commented that modest rate adjustments and promotional rate step-ups helped offset the fact that several of its customers subscribed only internet services and were not paying for TV.

For 38 million Americans, Charter® is the only choice of high-speed home broadband. This makes it very difficult for Internet customers to switch as the prices increase. Several cable TV subscribers have dropped the service in order to continue with the online streaming options. Charter® saw its video customer base drop from 16.4 million at the conclusion of 2017 to 16.1 million at the end of 2018. Meanwhile, its broadband subscriber base showed an increase from 22.5 million to 23.6 million in the same time span.