Charter’s Spectrum said its massive project to upgrade its network to offer multi-gigabit speeds will wrap up as late as the middle of 2026, marking a slight delay from its original forecast.
Charter CEO Christopher Winfrey, speaking on the company’s third-quarter earnings conference call, said he now believes project will last until the end of 2025 or the middle of 2026. The company previously said it expected to wrap things up by the end of 2025. He said the timing will depend on its supply chain for networking equipment, how it manages its capital, and the buildout of its network in rural areas, which is supporting by government funding.
The delay of six months underscores the juggling priorities for Charter as it races to build out the capabilities of its network for its core base while also tapping the opportunity to expand its network to new, rural markets with the aid of state and federal funding. While the multi-gig network project is expected to improve its competitive position against telecom and smaller providers offering fiber speeds and 5G home internet over the long term, Winfrey noted that the gains from new rural subscribers are more immediate.
Charter is among the providers taking advantage of both the Rural Digital Opportunity Fund and the Broadband Equity Access and Deployment Program, which offers matching funds and subsidies for network buildouts in areas where there isn’t yet access to high-speed internet. The extra time and process required to apply for these funds, as well as navigating through different state requirements, is another factor in the new deadline.
CFO Jessica Fischer noted that Charter plans to connect 110,000 rural homes in the fourth quarter, and operate at that pace throughout 2024, which means a capital run rate that’s $500 million higher than this year. This investment in the rural communities is pushing back some of the priorities in upgrading its existing markets.
Winfrey said he remains committed to connecting his entire footprint with multi-gig speeds, and vowed to retain the claim of network speed superiority. He also knocked the telecom companies for selectively building fiber in cities and other densely populated communities, rather than cover everyone.
“We’re trying to balance investor expectation and show discipline,” Winfrey said, noting that six months isn’t a material difference in time.
In addition, a lot of the capital will be spent early on since a lot equipment and prep work must be set up ahead of time before you actually make any upgrade installations, Fischer said.
On the BEAD front, Winfrey said that he was disappointed with the National Telecommunications and Information Administration’s guidelines to the states, which let them craft their own obligations and requirements. He said that Charter won’t pursue opportunities with the BEAD program if they contain regulations around pricing and plans.
“We’ll work in states that allow us to retail flexibility on the business, properly respond to business demand and ultimately earn a return,” Winfrey said.
Charter reported third-quarter results which saw a decline of 320,000 TV customers, but the addition of 63,000 internet customers.