(Reuters) – Charter Communications missed market estimates for quarterly broadband customer additions and posted lower free cash flow on Friday, as it grappled with network expansion costs and tough competition in a saturated market.
Shares of the Stamford, Connecticut-based company fell more than 5% in trading before the bell.
Charter has been dealing with intense competition for broadband and wireless mobile customers, while its traditional television-focused business has suffered due to cord-cutting.
That has forced the company to turn to rural areas in search of subscriber and earnings growth – a move analysts say will drive up costs before paying off in the long term.
Free cash flow fell 27.2% to $1.1 billion in the quarter from a year ago as a result of network expansion expenses. Analysts at Visible Alpha had estimated free cash flow of $1.19 billion.
Charter added 63,000 internet customers in the quarter, lower than a 77,510 increase estimated by Visible Alpha. It had added 75,000 subscribers in the year ago.
Rival Comcast on Thursday forecast higher broadband losses after the number of customers unexpectedly declined in the third quarter.
Video revenue fell 8.6%, with Charter losing 327,000 video subscribers during the quarter, compared with 204,000 losses in the prior year.
The company was embroiled in a dispute with Walt Disney earlier this year, with ESPN, FX and other channels from the House of Mickey Mouse disappearing from Charter’s cable service on Aug. 31 after the companies failed to reach an agreement over channel fees and how to package them.
The companies finally reached an agreement just hours before the start of NFL “Monday Night Football” on Sept. 11.
The broadband and cable TV provider said revenue for the third quarter grew 0.2% to $13.58 billion, compared with analysts’ average estimates of $13.63 billion, according to LSEG data.
Adjusted profit came in at $8.25 per share, beating estimates of $7.94 per share.
(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Maju Samuel)
