CHTR - Charter Communications

[KJP]

 

I was under the impression they are working together?

 

Legacy Charter bought Time Warner Cable and the cable systems of Advance/Newhouse at the same time, and A/N retained some ownership in the New Charter (basically, they took a bunch of stock in NewCo as payment). They've been maintaining their % by selling back into the company's buybacks.

 

if they are borrowing against their stake then it's unlikely that they continue on that path?

 

It appears A/N will continue selling into the buyback.  That's why the release refers to only a "portion" of A/N's units being pledged as collateral.

[scorpioncapital]

A bit confused ,

 

"Google, Dish, Charter, and others all plan to have 5G networks launching in 2019 and 2020. This is likely just the start of what may become a true price war as T-Mobile has announced plans to bundle home and wireless internet into one cheap low wireless plan."

 

Is charter have anything to do with 5g??

 

https://www.cordcuttersnews.com/5g-internet-is-cheaper-than-you-thought-will-push-cord-cutting-forward/

 

I am getting a bit worried that this 5g revolution is happening faster than predicted. Furthermore everytime I see 'justification' arguments why it will cost too much , won't work, or cable is Intermediary I feel even more reason to run. But I'm truly not sure about the political and technological force. Is this destined for the too hard pile?

 

 

[Liberty]

Charter has been doing some 5G tests, and they have a MVNO contract with Verizon. They also have lots of public wifi points that can serve to offload some of those "mobile" bits.

[UK]

https://www.cnbc.com/2018/08/15/cnbc-exclusive-cnbc-transcript-verizon-ceo-hans-vestberg-speaks-with.html

[DooDiligence]

https://www.cnbc.com/2018/08/15/cnbc-exclusive-cnbc-transcript-verizon-ceo-hans-vestberg-speaks-with.html

 

ALL CAPS advertisement for 5G, we'll see.

[LongTermView]

https://www.cnbc.com/2018/08/15/cnbc-exclusive-cnbc-transcript-verizon-ceo-hans-vestberg-speaks-with.html

 

This sounds good for Charter:

Sorkin: So here's the fundamental question of 5G and Joe and Becky and I were talking about this during a commercial break in the 6:00 hour, which is: do you believe that 5G is fundamentally long-term going to upend what might be described as the traditional cable business? Now I'm thinking of the parent of this network Comcast, Charter, effectively everybody. Does the technology of being able to effectively cut the wire upend the business -- or and I've heard Brian Roberts say this before, you will always need the wire or at least wires under the ground. That ultimately 5G or any wireless technology are still based on getting as close to the home as possible?

 

Vestberg: You're still going to have fiber coming close to the technology that we're sending out the radio.

 

The transcript butchered the densification part. Instead of saying "densification is another" it states "identification is not there."

 

[DooDiligence]

https://www.cnbc.com/2018/08/15/cnbc-exclusive-cnbc-transcript-verizon-ceo-hans-vestberg-speaks-with.html

 

This sounds good for Charter:

Sorkin: So here's the fundamental question of 5G and Joe and Becky and I were talking about this during a commercial break in the 6:00 hour, which is: do you believe that 5G is fundamentally long-term going to upend what might be described as the traditional cable business? Now I'm thinking of the parent of this network Comcast, Charter, effectively everybody. Does the technology of being able to effectively cut the wire upend the business -- or and I've heard Brian Roberts say this before, you will always need the wire or at least wires under the ground. That ultimately 5G or any wireless technology are still based on getting as close to the home as possible?

 

Vestberg: You're still going to have fiber coming close to the technology that we're sending out the radio.

 

Nice.

 

I think these guys are just hyping 5G to attract subs & annoy broadband co's by keeping their equity low.

 

Doesn't matter as long as the toll booth keeps working.

[scorpioncapital]

https://www.cnbc.com/2018/08/15/how-5g-will-change-home-internet-and-tv.html

 

As an aside , the world seems bonkers. In north America I will pay say 30 to 50 USd for unlimited mobile , in UK perhaps 25 to 30, in Ukraine ...6 for unlimited 4g LTE in Kyiv. 6! Now you tell me what is going on..is someone subsidizing everything or are prices just artificial everywhere else especially USA Canada ? I mean how can one justify the same service for such a lower price ? Now this may seem irrelevant but I think it has a huge impact on companies like chtr , lbtyk as I'm not sure it won't all end up being next to free soon .

 

[Spekulatius]

https://www.cnbc.com/2018/08/15/how-5g-will-change-home-internet-and-tv.html

 

As an aside , the world seems bonkers. In north America I will pay say 30 to 50 USd for unlimited mobile , in UK perhaps 25 to 30, in Ukraine ...6 for unlimited 4g LTE in Kyiv. 6! Now you tell me what is going on..is someone subsidizing everything or are prices just artificial everywhere else especially USA Canada ? I mean how can one justify the same service for such a lower price ? Now this may seem irrelevant but I think it has a huge impact on companies like chtr , lbtyk as I'm not sure it won't all end up being next to free soon .

 

You can get the same prices (U.K.) in the US, if you go prepaid. Cellphone, Internet, cable TV have been expensive in the US forever, although prices in Europe are going up too. That’s the reason why CHTR and CMCSA are a much better business than LBTYA.

 

As for TV, part of the reason was that TV wasn’t commercial and run like a public utility, that was paid by a viewers tax (at least in Germany). Private TV stations came up in the 80’s and had to finance themselves solely with ads. I think this kept prices low, but now we have premium channels (sports movies) that are subscription based.

[dwy000]

https://www.cnbc.com/2018/08/15/how-5g-will-change-home-internet-and-tv.html

 

As an aside , the world seems bonkers. In north America I will pay say 30 to 50 USd for unlimited mobile , in UK perhaps 25 to 30, in Ukraine ...6 for unlimited 4g LTE in Kyiv. 6! Now you tell me what is going on..is someone subsidizing everything or are prices just artificial everywhere else especially USA Canada ? I mean how can one justify the same service for such a lower price ? Now this may seem irrelevant but I think it has a huge impact on companies like chtr , lbtyk as I'm not sure it won't all end up being next to free soon .

 

Maintaining a nationwide network in the US is a lot more expensive than doing it in the Ukraine.  And the US companies had to spend 10's of $Billions to acquire the spectrum rights on top of that.  I don't know the situation in Ukraine specifically but I would guess the cell phone companies didn't have to spend nearly as much.

 

Just look at Sprint.  Even with ARPU's and pricing way higher than Europe or the Ukraine, they are barely cash flow breakeven and certainly not earning a decent return on capital deployed.

 

Check out the price of cell service in Canada.  And that's with 3 competitive providers.  The cost of a large geographic network is enormous and not really comparable to the smaller and denser European countries.

[scorpioncapital]

I'm of the view if I can get 4g lte for 5 bucks something is very very wrong in the west.

 

Meanwhile , https://money.cnn.com/2018/08/15/technology/verizon-5g-service-offer/index.html

[jmp8822]

I'm of the view if I can get 4g lte for 5 bucks something is very very wrong in the west.

 

Meanwhile , https://money.cnn.com/2018/08/15/technology/verizon-5g-service-offer/index.html

 

It seems the closer 5G gets the more undeniable it becomes that this could forever upend the cable/broadband business and internet stocks.  Seriously, Verizon is ramping up 5G in four cities this year for the specific purpose of eating broadband companies' lunch. The fact that it might work is intriguing to say the least. This has moved passed the "what if Verizon is willing to use 5G to acquire broadband customers?" hypothetical.  That is coming this year.  I wonder what the price/terms of the consumer offering will be - they have yet to announce those details.

[Spekulatius]

The price isn’t $5, it’s $50 with free TV valued at $45. It’s very likely a promotion. Verizon has a broadband business (FIOS) and they are selling for way more than $5 - I know, because I am their customers.

 

VZW can’t keep the price at $50 either be sure they need to pay the streaming company (GOOGL), so the $50 would be losing money for them. VZW is not know to give service away for free.

[scorpioncapital]

https://www.zdnet.com/article/verizon-transmits-5g-to-moving-vehicle/

 

What do people think of this strategy.

Suppose you have a stock you think could be good value or it might be a run off or declining problem over time , you *want* to be long but you see some risks. ..

Could you buy some long range put options and give up a little profit as insurance?

[chrispy]

5G is my biggest concern as well but it may very well end up making the cable companies even more of a necessity.

 

All of these press releases from Verizon are starting to sound like hype and over compensating... The ZDNet article states how impressive things are "By taking these tests out of the lab and into the field" despite that the test was done at "Nokia's Murray Hill, New Jersey, campus", aka a lab

[Liberty]

Verizon recently tried to buy CHTR for a higher price than its trading now. Not sure if that's what you do if you have a high-ROIC way to basically overbuild the country (which is kind of what 5G requires, with lots of small cells and lots of backhaul fiber required).

[scorpioncapital]

I think the best view is this : except for video , so far high speed internet is not really needed for most applications even iot.

 

https://www.google.com.ua/amp/s/www.forbes.com/sites/washingtonbytes/2017/09/22/the-dawn-of-5g-will-wireless-kill-the-broadband-star/amp/

[maybe4less]

Verizon recently tried to buy CHTR for a higher price than its trading now. Not sure if that's what you do if you have a high-ROIC way to basically overbuild the country (which is kind of what 5G requires, with lots of small cells and lots of backhaul fiber required).

 

Didn't Verizon already try to overbuild the country with FIOS? I believed they largely abandoned their build-out plans with that program because it wasn't working out for them financially in most markets.

[jmp8822]

Verizon recently tried to buy CHTR for a higher price than its trading now. Not sure if that's what you do if you have a high-ROIC way to basically overbuild the country (which is kind of what 5G requires, with lots of small cells and lots of backhaul fiber required).

 

Didn't Verizon already try to overbuild the country with FIOS? I believed they largely abandoned their build-out plans with that program because it wasn't working out for them financially in most markets.

 

Now that Verizon has built 5G in select cities to start offering in-home 5G services this year, I would guess they determined it would be cheaper to build 5G because of the smaller capex requirement compared to direct-to-home wires.  Google Fiber stopped building fiber in my area for a similar reason I believe - they had 5G plans which requires much less digging and labor to physically install in homes. Now the customer service will be much more hands off, i.e. no cable guy in your house required for 99+% of subscribers.

[walkie518]

https://www.oakmark.com/Oakmark-files/Media/Documents/TWST_StayingDisciplinedtoaBottom-Up_082718.pdf?dtr

 

pg 2

[Liberty]

https://www.multichannel.com/news/charters-winfrey-5g-not-comparable-to-docsis-3-1

 

“I don’t see anything about 5G that ever makes it comparable to DOCSIS 3.1 or DOCSIS 3.1 Full Duplex, or any capability we have through fixed line service,” [CHTR CFO] Winfrey said [...]

 

In order for 5G to work, he added, "you have to be relatively close to the home with fiber, and you need to have power. And to replicate that without cable infrastructure, you really need to be a cable over-builder…I don’t see any rationale for someone to do that.”

[jmp8822]

“I don’t see anything about 5G that ever makes it comparable to DOCSIS 3.1 or DOCSIS 3.1 Full Duplex, or any capability we have through fixed line service,” [CHTR CFO] Winfrey said [...]

 

In order for 5G to work, he added, "you have to be relatively close to the home with fiber, and you need to have power. And to replicate that without cable infrastructure, you really need to be a cable over-builder…I don’t see any rationale for someone to do that.”

 

All these quotes I see from Charter and the cable companies act like this isn't really happening.  The cell companies are building 5G with the intention of eating the cable companies' lunch.  The whole 'too expensive' thing isn't a good counter argument because the cell companies are building it and will finish - whether the build out and sales are ultimately profitable don't matter right now. The cell companies are competing between each other for early-mover dominance in 5G - cable internet could be the first casualty.  If the monthly cost is lower/similar to current at-home cable internet prices, I think everyone would switch to the cell companies' 5G offering. I know I would switch - who wants to meet a cable guy at their house between 10am-12pm on Wednesday?

 

T-Mobile is one of the big four jumping into 5G headfirst. T-Mobile Chief Operating Officer Mike Sievert: On 5G, “We intend to plunge into broadband; not just mobile connections like today but into in-home broadband because this network has the depth and breadth of 5G that’s simply unprecedented in the market. We see the opportunity to offer broadband in huge swaths of the market, which will bring competition benefits to customers, even those who don’t choose us.” Sievert projected approximately 10 million broadband customers “over the first few years.”

[Broeb22]

These being the words coming from a company that didn’t have enough capital to invest in 5G until their announced merger with fellow laggard Sprint. Now suddenly they are going to eat the cable guys’ lunch. Sounds like something they would tell the government and everyone else to get a merger approved.

 

Additionally, from a competitive perspective, why would Verizon and Sprint allegedly offer to buy Charter for over $100BN if they though they could just come in and make the cable guys dinosaurs? Is paying $100BN for Charter really cheaper than building out a 5G network that makes cable infrastructure redundant?

 

I don’t have a dog in this fight at the moment, but have been following somewhat closely. With Charter offering wireless data plans based on an MVNO agreement (with Verizon) it seems like this is very much up in the air for the time being.

[JRM]

Where exactly can I sign up for this 5G fixed broadband service?  Meanwhile, Charter is rolling out Spectrum Wireless nation wide.  Who is going to eat who's lunch?

[Spekulatius]

Where exactly can I sign up for this 5G fixed broadband service?  Meanwhile, Charter is rolling out Spectrum Wireless nation wide.  Who is going to eat who's lunch?

 

There is also the question if 5G will be unlimited (or quasi unlimited like your current home internet) or you just get a couple of GIGS for $50/ month. At least in the past, the wirelsss companies have not been in the business of giving away stuff for free.