Charter Posts $9.17 EPS as Internet Subscribers Fall 120,000 in Q1
Charter Communications (CHTR) reported first-quarter 2026 earnings per share of $9.17, up 10% from $8.34 in the prior-year quarter, even as the cable giant faced continued pressure from broadband subscriber losses and declining video revenue.
Key Numbers
The Stamford, Connecticut-based company posted revenue of $13.6 billion for the quarter ended March 31, 2026, down 1.0% year-over-year from $13.7 billion. The decline was primarily driven by lower residential video revenue, though residential connectivity revenue managed to grow 0.9% year-over-year.
Net income attributable to Charter shareholders totaled $1.16 billion in the first quarter, down 4.4% from $1.22 billion in the year-ago period. Despite the net income decline, earnings per share improved due to the company's aggressive share buyback program — Charter repurchased 4.3 million shares for $963 million during the quarter.
The most concerning metric was the loss of 120,000 Spectrum Internet customers during the quarter, double the 59,000 lost in Q1 2025. This brought total internet customers to 29.6 million as of March 31, 2026. Total customer relationships declined to 31.7 million from 32.2 million a year earlier.
On the bright side, Spectrum Mobile continued its strong growth trajectory, adding 368,000 lines in the quarter to reach 12.1 million total mobile lines — up 17.1% year-over-year. Mobile service revenue jumped 15.1% to $1.05 billion, providing a crucial growth driver as traditional cable services declined.
Adjusted EBITDA fell 2.2% to $5.64 billion, with margins compressing to 41.5% from 42.0% in the prior year. Free cash flow declined 12.3% to $1.37 billion, pressured by a 19% increase in capital expenditures to $2.86 billion as Charter invested heavily in network upgrades and rural expansion.
What Management Said
CEO Chris Winfrey struck a confident tone despite the challenging quarter, emphasizing the company's long-term positioning. "We remain confident about our ability to win in the marketplace and grow over the longer term," Winfrey stated. "That confidence is founded on our advanced network, our core operating strategy of delivering great products at great prices and our focus on increasing customer satisfaction."
Winfrey highlighted Charter's network evolution initiatives, noting the company expects to complete its symmetrical and multi-gigabit internet speed rollout across its entire footprint by 2027. The CEO also pointed to improving trends as Charter refines its approach: "As we continue to improve our products, pricing, packaging, and service, and complete our rural and network initiatives, we are poised for improving customer and free cash flow growth."
Management emphasized several strategic initiatives launched during the quarter, including the new $1,000 savings guarantee for customers switching from major wireless carriers, and the February launch of Invincible WiFi — a WiFi 7 router with 5G cellular backup for uninterrupted connectivity during outages.
The company also touted the value proposition of its Spectrum TV Select packages, which now include approximately $120 per month in streaming services at no extra cost, including Disney+, Hulu, ESPN, HBO Max, Paramount+, and others. This bundling strategy helped moderate video subscriber losses to 60,000 in Q1 2026, compared to 181,000 in the prior-year quarter.
What to Watch
Investors should closely monitor several key trends in upcoming quarters. The accelerating broadband subscriber losses represent Charter's most pressing challenge — the 120,000 loss in Q1 marks a significant deterioration from recent trends and suggests intensifying competition from fiber providers and fixed wireless alternatives.
The mobile business remains the brightest spot, but growth is decelerating — the 368,000 net adds in Q1 2026 compared to 507,000 in Q1 2025. Charter needs mobile to offset weakness elsewhere, making any further slowdown concerning.
Capital intensity bears watching as Charter spent $2.86 billion in Q1, including $812 million on line extensions. With the network evolution initiative running through 2027 and ongoing rural buildouts, elevated capex could continue pressuring free cash flow. The company activated 89,000 subsidized rural passings in the quarter, adding 41,000 customer relationships in these new areas — a positive sign for the rural strategy's potential returns.
The evolution of monthly residential revenue per customer, which fell 1.4% to $118.44, will be critical. Excluding streaming app allocation costs, the metric rose just 0.3% year-over-year, suggesting limited pricing power in a competitive environment.
Finally, Charter's ability to stabilize its connectivity customer base while maintaining margins will determine whether the company can return to consistent free cash flow growth. With connectivity customers down 1.0% year-over-year and EBITDA margins compressing, execution on customer retention and operational efficiency improvements will be paramount in the quarters ahead.
*StockCliff Research*