3Q21 Press Release

NEWS

Charter Announces Third Quarter 2021 Results

Stamford, Connecticut - October 29, 2021 - Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and nine months ended September 30, 2021.

Key highlights:

• Third quarter total residential and small and medium business ("SMB") customer relationships increased by 185,000. As of September 30, 2021, Charter served a total of 31.9 million residential and SMB customers, with 1.0 million net new customer relationships added over the last twelve months.
• Third quarter total residential and SMB Internet customers increased by 265,000. As of September 30, 2021, Charter served a total of 29.9 million residential and SMB Internet customers, with 1.3 million total Internet customers added over the last twelve months.
• Third quarter total residential and SMB mobile lines increased by 244,000. As of September 30, 2021, Charter served a total of 3.2 million mobile lines, with 1.1 million mobile lines added over the last twelve months.
• Third quarter revenue of $13.1 billion grew by 9.2% year-over-year, driven by residential revenue growth of 9.4%, mobile revenue growth of 45.4% and commercial revenue growth of 7.1%.
• Third quarter Adjusted EBITDA1 of $5.3 billion grew by 13.9% year-over-year.
• Net income attributable to Charter shareholders totaled $1.2 billion in the third quarter.
• Third quarter capital expenditures totaled $1.9 billion and included $119 million of mobile-related capital expenditures.
• Third quarter free cash flow1 of $2.5 billion grew by 41.2% year-over-year.
• During the third quarter, Charter purchased approximately 5.3 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $4.0 billion.

"The value of our connectivity products allowed us to add over 1 million customer relationships over the last year," said Tom Rutledge, Chairman and CEO of Charter. "Looking forward, we remain focused on improving both the quality and value of our products as demand for more advanced services grows. As data usage both inside and outside the home continues to increase, so do our network and product capabilities. We remain confident in our ability to grow customers, EBITDA and free cash flow for many years to come."

1. Adjusted EBITDA and free cash flow are non-GAAP measures defined in the "Use of Adjusted EBITDA and Free Cash Flow Information" section and are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the addendum of this news release.

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Key Operating Results

					Approximate as of
			September 30,			September 30,			September 30,
			2021 (a)			2020 (a)			2019 (a)
Footprint (b)
Estimated Passings		54,152			53,022			51,940
Customer Relationships (c)
Residential		29,823			28,912			27,037
SMB		2,126			2,021			1,930
Total Customer Relationships		31,949			30,933			28,967
Residential		163			416			282
SMB		22			41			28
Total Customer Relationships Quarterly Net Additions		185			457			310
Total Customer Relationship Penetration of Estimated Passings (d)		59.0 %			58.3 %			55.8 %
Monthly Residential Revenue per Residential Customer (e)	$	115.15	$	109.03	$	112.00
Monthly SMB Revenue per SMB Customer (f)	$	167.29	$	164.77	$	169.44
Residential Customer Relationships Penetration
Single Play Penetration (g)		46.4 %			44.2 %			42.7 %
Double Play Penetration (g)		32.8 %			32.3 %			29.9 %
Triple Play Penetration (g)		20.9 %			23.5 %			27.3 %
% Residential Non-Video Customer Relationships		48.7 %			45.7 %			41.8 %
Internet
Residential		27,965			26,807			24,595
SMB		1,934			1,826			1,730
Total Internet Customers		29,899			28,633			26,325
Residential		243			494			351
SMB		22			43			29
Total Internet Quarterly Net Additions		265			537			380
Video
Residential		15,287			15,705			15,725
SMB		604			530			520
Total Video Customers		15,891			16,235			16,245
Residential		(133)			53			(77)
SMB		12			14			2
Total Video Quarterly Net Additions		(121)			67			(75)
Voice
Residential		8,784			9,335			9,595
SMB		1,273			1,207			1,120
Total Voice Customers		10,057			10,542			10,715
Residential		(230)			(63)			(213)
SMB		14			38			23
Total Voice Quarterly Net Additions		(216)			(25)			(190)
Mobile Lines (h)
Residential		3,085			2,020			793
SMB		99			40			1
Total Mobile Lines		3,184			2,060			794
Residential		230			348			275
SMB		14			15			1
Total Mobile Lines Quarterly Net Additions		244			363			276
Enterprise (i)
Enterprise Primary Service Units ("PSUs")		284			272			264
Enterprise Quarterly Net Additions		4			2			6

Footnotes- In thousands, except per customer and penetration data. See footnotes to unaudited summary of operating statistics on page 5 of the addendum of this news release. The footnotes contain important disclosures regarding the definitions used for these operating statistics. All percentages are calculated using whole numbers. Minor differences may exist due to rounding.

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During the third quarter of 2021, Charter's residential customer relationships grew by 163,000, compared to growth of 416,000 in the third quarter of 2020 and 282,000 in the third quarter of 2019. As of September 30, 2021, Charter had 29.8 million residential customer relationships, with year-over-year growth of 3.2%.

Charter added 243,000 residential Internet customers during the third quarter of 2021, compared to 494,000 during the third quarter of 2020 and 351,000 during the third quarter of 2019. The lower net additions relative to 2020 and 2019 was primarily a function of fewer selling opportunities partly offset by lower churn in the third quarter of 2021. Currently, 200 Mbps is the minimum speed offered to new Spectrum Internet® customers in 85% of Charter's footprint. As of September 30, 2021, over 70% of total Internet customers subscribed to tiers that provided 200 Mbps or more of speed. Charter also offers Spectrum Internet Gig across its entire footprint. Charter's Advanced Home WiFi, a managed WiFi service that provides customers an optimized home network while providing greater control of their connected devices, has been launched across nearly all of Charter's footprint for new Internet connects. In addition, Charter's new WiFi 6 router offers lower latency and performs better in environments with many connected WiFi devices, and has the ability to offer speeds of well over 1 Gbps.

Residential video customers decreased by 133,000 in the third quarter of 2021, compared to an increase of 53,000 in the third quarter of 2020 and a decrease of 77,000 in the third quarter of 2019. As of September 30, 2021, Charter had 15.3 million residential video customers.

During the third quarter of 2021, residential wireline voice customers declined by 230,000, compared to declines of 63,000 in the third quarter of 2020 and 213,000 in the third quarter of 2019. As of September 30, 2021, Charter had 8.8 million residential wireline voice customers.

Third quarter 2021 residential revenue per residential customer (excluding mobile) totaled $115.15, and increased by 5.6% compared to the prior year period, given $218 million of sports network credits recorded in the prior year period that resulted from fewer sporting events being broadcast due to the COVID-19 pandemic, promotional rate step-ups and video rate adjustments that pass through programmer rate increases, partly offset by a higher mix of non-video customer relationships and a higher mix of lower priced video packages within Charter's video customer base.

SMB customer relationships grew by 22,000 in the third quarter of 2021, while third quarter 2020 and 2019 SMB customer relationships grew by 41,000 and 28,000, respectively. During the third quarter of 2021, enterprise PSUs grew by 4,000, compared to growth of 2,000 in the third quarter of 2020 and 6,000 in the third quarter of 2019.

During the third quarter of 2021, Charter added 244,000 mobile lines, compared to growth of 363,000 during the third quarter of 2020 and 276,000 during the third quarter of 2019. Spectrum MobileTM is available to all new and existing Spectrum Internet customers. Spectrum Mobile customers can choose one of two simple ways to pay for data, "Unlimited" or "By the Gig." Early in the fourth quarter, Spectrum Mobile introduced new Unlimited pricing starting at $29.99/month per Unlimited line for customers with at least two lines. Additionally, customers qualify for the new multiline pricing when combining By the Gig lines for $14/ GB with Unlimited lines. All Spectrum Mobile plans include 5G access, with no added taxes, fees or contracts. Spectrum Mobile's new Unlimited pricing is part of Charter's converged network strategy to provide consumers a differentiated connectivity experience with highly competitive, simple data plans and pricing.

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Third Quarter Financial Results

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(dollars in millions, except per share data)

		Three Months Ended September 30,
		2021			2020		% Change
REVENUES:
Internet	$	5,363	$	4,722	13.6 %
Video		4,502			4,221	6.7 %
Voice		409			449	(8.8)%
Residential revenue		10,274			9,392	9.4 %
Small and medium business		1,062			988	7.5 %
Enterprise		656			617	6.4 %
Commercial revenue		1,718			1,605	7.1 %
Advertising sales		391			460	(15.1)%
Mobile		535			368	45.4 %
Other		228			214	6.5 %
Total Revenue		13,146			12,039	9.2 %
COSTS AND EXPENSES:
Total operating costs and expenses		7,860			7,400	6.2 %
Adjusted EBITDA	$	5,286	$	4,639	13.9 %
Adjusted EBITDA margin		40.2 %			38.5 %
Capital Expenditures	$	1,861	$	2,014
% Total Revenue		14.2 %			16.7 %
Net income attributable to Charter shareholders	$	1,217	$	814
Earnings per common share attributable to Charter shareholders:
Basic	$	6.69	$	4.01
Diluted	$	6.50	$	3.90
Net cash flows from operating activities	$	4,263	$	3,664
Free cash flow	$	2,476	$	1,754

Revenues

Third quarter revenue increased by 9.2% year-over-year to $13.1 billion, driven primarily by growth in residential, mobile and commercial revenues. Excluding advertising, which benefited from political spend in the third quarter of 2020, and $218 million of sports network credits recorded in the prior year period, revenue grew by 8.1% year-over-year.

Residential revenue totaled $10.3 billion in the third quarter, an increase of 9.4% year-over-year. The year-over-year revenue growth rate benefited in part from the aforementioned sports network credits recorded in the prior year period.

Internet revenue grew by 13.6% year-over-year to $5.4 billion, driven by growth in Internet customers during the last year, promotional rate step-ups, rate adjustments and higher bundled revenue allocation.

Video revenue totaled $4.5 billion in the third quarter, an increase of 6.7% compared to the prior year period, driven by the aforementioned $218 million of sports network credits recorded in the prior year period, promotional rate step-ups and video rate adjustments that pass through programmer rate increases, partly offset by a higher mix of lower priced video packages within Charter's video customer base, a decline in video customers during the last year and lower bundled revenue allocation.

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Voice revenue totaled $409 million in the third quarter, a decrease of 8.8% compared to the third quarter of 2020, driven by a decline in wireline voice customers over the last twelve months and value- based pricing.

Commercial revenue increased by 7.1% year-over-year to $1.7 billion, driven by SMB and enterprise revenue growth of 7.5% and 6.4% year-over-year, respectively. Third quarter 2021 SMB revenue growth benefited from COVID-19 related impacts in the third quarter of 2020. Third quarter 2021 enterprise revenue was impacted by a $16 million one-time benefit. Enterprise revenue excluding wholesale and the one-time benefit increased by 6.5% year-over-year, reflecting PSU growth.

Third quarter advertising sales revenue of $391 million decreased by 15.1% compared to the year- ago quarter, driven by lower political revenue. Excluding political revenue in both periods, advertising sales revenue increased by 10.7% year-over-year, given higher advanced advertising revenue in the third quarter of 2021 and COVID-19 related impacts in the prior year period.

Third quarter mobile revenue totaled $535 million, an increase of 45.4% year-over-year, primarily driven by mobile line growth.

Other revenue totaled $228 million in the third quarter, an increase of 6.5% year-over-year.

Operating Costs and Expenses

Third quarter total operating costs and expenses increased by $460 million, or 6.2% year-over-year.

Third quarter programming costs increased by $256 million, or 9.4% as compared to the third quarter of 2020, reflecting $163 million of sports network rebates in the prior year period that resulted from fewer games being broadcast during COVID-19 and contractual programming increases and renewals, partly offset by fewer video customers and a higher mix of lower cost packages within Charter's video customer base.

Regulatory, connectivity and produced content expenses increased by $22 million, or 3.5% year- over-year, primarily driven by higher regulatory and franchise fees and higher video CPE sold to customers.

Costs to service customers decreased by $3 million, or 0.2% year-over-year, despite year-over-year residential and SMB customer growth of 3.3%. The year-over-year decrease in costs to service customers was primarily driven by lower transaction costs, offset by higher bad debt and previously announced wage increases for hourly field operations and call center employees as Charter meets its commitment to a minimum $20 per hour wage in 2022.

Marketing expenses were unchanged year-over-year.

Third quarter mobile costs totaled $607 million, an increase of 33.2% year-over-year, and were comprised of device costs, customer acquisition costs, and service and operating costs.

Other expenses increased by $34 million, or 3.8% as compared to the third quarter of 2020, primarily driven by higher corporate costs, partly offset by lower advertising sales expense.

Adjusted EBITDA

Third quarter Adjusted EBITDA of $5.3 billion grew by 13.9% year-over-year, reflecting growth in revenue and operating expenses of 9.2% and 6.2%, respectively.

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