Charter Communications on Tuesday reported sequential improvements in subscriber additions for its fledgling Spectrum Mobile service, with executives expecting the business to be profitable on a standalone basis once it reaches scale.
In the first quarter Charter added 1760,000 mobile lines, compared to 113,000 in the fourth quarter of 2018. That beat BTIG analysts’ expectations by 26,000 and was slightly more than the 176,000 additions Comcast reported last week for its Xfinity Mobile service.
Spectrum Mobile launched across Charter’s footprint in September, following a soft launch over the summer, and now has 310,000 mobile lines.
On the company’s quarterly earnings call today, Charter Chairman and CEO Tom Rutledge said the Spectrum Mobile business, which is sold through an MVNO agreement with Verizon, is “ramping quickly, as expected.”
CFO Christopher Winfrey indicated that mobile customers consist of a “healthy mix” taking the service’s unlimited or ‘by the gig’ price options, which cost $45 per month and $14 per gigabyte, respectively.
Winfrey said that eventually, the company not only expects the mobile business to become a meaningful driver of overall connectivity sales and retention, but profitable on its own as well.
“We believe there will be opportunities to further improve the economics of our mobile business and offer unique connectivity services,” Winfrey said.
Rutledge noted that Charter’s currently testing ways to broaden the mobile capabilities of the cable operator’s network, using a combination of dual-SIM technology with unlicensed and potentially licensed spectrum.
Charter has been conducting tests with spectrum in the shared CBRS band, some of which will eventually be available at no cost. Rutledge reiterated that CBRS experiments are ongoing, and Charter continues to develop WiFi capabilities.
“There are a mix of WiFi, licensed and unlicensed opportunities and they can be used in different locations,” Rutledge said.
He noted the company looks at three infrastructure zones – in the home, on the physical plant, and “potentially macro tower type spectrum capabilities.”
While Charter is investigating moving more data traffic onto its network in a way that is efficient and economically viable, executives said, capital investments in that area likely won’t happen this year.
“We think the most significant opportunity may be on our strand, but we haven’t completed any of the experiments yet and haven’t decided to deploy any capital,” Rutledge said.
Winfrey also clarified that they expect the mobile business to be profitable under its current MVNO agreement with Verizon, a deal which he said the company is happy with and is “working extremely well.” Comcast’s Xfinity Mobile also operates under an MVNO agreement with Verizon.
Overall, Charter reported first quarter revenues of $11.2 billion, up 5.1 percent from a year ago, attributed to both commercial and residential revenue growth, and $140 million in mobile revenue.
Wireless capex for the quarter was $88 million, and Charter reported first quarter operating costs that included $260 million of mobile expenses.
Check out how Charter’s broadband and cable business did in the first quarter, here.
