Communications

Report by Hedgeye

CHTR faces 1) a saturated market with home broadband and internet penetration rates well over 90%, 2) increased competition on the margin from fibre and fixed wireless, and 3) capital misallocation - expensive rural buildouts are resulting in higher levels of capex and declining FCF. Meanwhile, management continues to be adamant about repurchasing shares at 4.5x leverage. Ultimately, Andrew Freedman struggles to see how it can grow EBITDA. He made CHTR his top short idea at the end of Nov, which proved timely as the stock fell 9% earlier this week as management guided down for Q4 internet adds. With the shares trading at $368, Andrew still sees ~50% downside.

Communications

Report by Arete Research

It’s early days for CHTR’s rural investments, but first results look encouraging - Arete’s cohort modelling suggests that rural expansion can contribute 112k Internet net adds in 2023, 195k in 2024 and 241k in 2025 (ignoring further subsidy awards). Spectrum One can also be a further source of broadband (as well as mobile) net adds. Arete sees Internet net adds 22-33% higher than consensus over 2024-26 and expects CHTR to grow EBITDA at a +4.4% 5-year CAGR with FCF growing at +10%. TP $600 (45% upside).