Charter Communications : 1Q21 Press Release

NEWS

Charter Announces First Quarter 2021 Results

Stamford, Connecticut - April 30, 2021 - Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three months ended March 31, 2021.

Key highlights:

• First quarter total residential and small and medium business ("SMB") customer relationships increased by 302,000. As of March 31, 2021, Charter served a total of 31.4 million residential and SMB customers, with 1.7 million net new customer relationships added over the last twelve months.
• First quarter total residential and SMB Internet customers increased by 355,000. As of March 31, 2021, Charter served a total of 29.2 million residential and SMB Internet customers, with 2.0 million total Internet customers added over the last twelve months.
• First quarter total residential and SMB mobile lines increased by 300,000. As of March 31, 2021, Charter served a total of 2.7 million mobile lines, with 1.3 million mobile lines added over the last twelve months.
• First quarter revenue of $12.5 billion grew by 6.7% year-over-year, driven by residential revenue growth of 5.8% and mobile revenue growth of 90.7%.
• First quarter Adjusted EBITDA1 of $4.9 billion grew by 12.5% year-over-year.
• Net income attributable to Charter shareholders totaled $807 million in the first quarter.
• First quarter capital expenditures totaled $1.8 billion and included $112 million of mobile-related capital expenditures.
• First quarter free cash flow1 of $1.9 billion grew by 35.3% year-over-year.
• During the first quarter, Charter purchased approximately 6.3 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $4.0 billion.

"We continue to execute well in a market environment that has not yet returned to normal. We added 355,000 Internet customers in the first quarter, and 2 million over the last year, for year-over-year growth of 7.3%," said Tom Rutledge, Chairman and CEO of Charter. "Our value-driven operating strategy of providing multiple high-quality products at lower prices than sold individually continues to drive our growth."

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
		March 31, 2021 (a)		March 31, 2020 (a)		March 31, 2019 (a)
Footprint (b)
Estimated Passings		53,592			52,418			51,384
Customer Relationships (c)
Residential		29,361			27,745			26,591
SMB		2,071			1,976			1,863
Total Customer Relationships		31,432			29,721			28,454
Residential		282			468			321
SMB		20			18			30
Total Customer Relationships Quarterly Net Additions		302			486			351
Total Customer Relationship Penetration of Estimated Passings (d)		58.7 %			56.7 %			55.4 %
Monthly Residential Revenue per Residential Customer (e)	$	112.18	$	112.73	$	112.47
Monthly SMB Revenue per SMB Customer (f)	$	163.79	$	168.83	$	170.64
Residential Customer Relationships Penetration
Single Play Penetration (g)		45.2 %			43.6 %			42.1 %
Double Play Penetration (g)		32.6 %			31.2 %			27.9 %
Triple Play Penetration (g)		22.2 %			25.2 %			30.0 %
% Residential Non-Video Customer Relationships		47.3 %			44.0 %			40.0 %
Internet
Residential		27,357			25,471			24,023
SMB		1,877			1,775			1,664
Total Internet Customers		29,234			27,246			25,687
Residential		334			563			398
SMB		21			19			30
Total Internet Quarterly Net Additions		355			582			428
Video
Residential		15,483			15,550			15,952
SMB		579			524			509
Total Video Customers		16,062			16,074			16,461
Residential		(156)			(70)			(152)
SMB		18			-			7
Total Video Quarterly Net Additions		(138)			(70)			(145)
Voice
Residential		9,113			9,360			10,015
SMB		1,238			1,162			1,072
Total Voice Customers		10,351			10,522			11,087
Residential		(102)			(83)			(120)
SMB		14			18			21
Total Voice Quarterly Net Additions		(88)			(65)			(99)
Mobile Lines
Residential		2,605			1,359			310
SMB		70			13			-
Total Mobile Lines		2,675			1,372			310
Residential		285			281			176
SMB		15			9			-
Total Mobile Lines Quarterly Net Additions		300			290			176
Enterprise (h)
Enterprise Primary Service Units ("PSUs")		276			269			253
Enterprise Quarterly Net Additions		2			2			5

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 first quarter of 2021, Charter's residential customer relationships grew by 282,000, compared to growth of 468,000 in the first quarter of 2020 and 321,000 in the first quarter of 2019. As of March 31, 2021, Charter had 29.4 million residential customer relationships, with year-over-year growth of 1.6 million, or 5.8%.

During the first quarter of 2021, Charter added 334,000 residential Internet customers, compared to 563,000 during the first quarter of 2020 and 398,000 during the first quarter of 2019. The lower net additions relative to 2020 and 2019 is a function of a lower market churn environment, resulting in fewer selling opportunities in the first quarter of 2021. During the first quarter, Charter doubled its starting download speed to 200 Mbps in 17 additional markets at no extra cost to customers. Currently, 200 Mbps is the minimum speed offered to new Spectrum Internet® customers in nearly 85% of Charter's footprint, with 100 Mbps the minimum speed offered in the remainder of its footprint. As of March 31, 2021, over 70% of customers subscribed to Internet tiers that provided 200 Mbps or more of speed. Charter also offers Spectrum Internet Gig across its entire footprint. Additionally, Charter's Advanced In-Home WiFi, a managed WiFi service that provides customers an optimized home network while providing greater control of their connected devices, has now been launched across more than 90% of Charter's footprint for new Internet connects.

Residential video customers decreased by 156,000 in the first quarter of 2021, compared to decreases of 70,000 in the first quarter of 2020 and 152,000 in the first quarter of 2019. As of March 31, 2021, Charter had 15.5 million residential video customers.

During the first quarter of 2021, residential wireline voice customers declined by 102,000, compared to declines of 83,000 in the first quarter of 2020 and 120,000 in the first quarter of 2019. As of March 31, 2021, Charter had 9.1 million residential wireline voice customers.

First quarter 2021 residential revenue per residential customer (excluding mobile) totaled $112.18, and declined by 0.5% compared to the prior year period, given a higher percentage of non-video customers, a higher mix of lower priced video packages within Charter's video customer base, lower pay- per-view and video on demand revenue and lower installation revenue, partly offset by promotional rate step-ups and rate adjustments.

SMB customer relationships grew by 20,000 in the first quarter of 2021, while first quarter 2020 and 2019 SMB customer relationships grew by 18,000 and 30,000, respectively. During the first quarter of 2021, enterprise PSUs grew by 2,000, compared to growth of 2,000 in the first quarter of 2020 and 5,000 in the first quarter of 2019.

During the first quarter of 2021, Charter added 300,000 mobile lines, compared to growth of 290,000 during the first quarter of 2020 and 176,000 during the first quarter of 2019. Spectrum MobileTM is available to all new and existing Spectrum Internet customers and runs on America's most awarded LTE network combined with Spectrum WiFi. Spectrum Mobile customers can choose one of two simple ways to pay for data, "Unlimited" or "By the Gig." All plans include 4G and 5G access, with no added taxes, fees or contracts.

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First 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 March 31,
		2021			2020		% Change
REVENUES:
Internet	$	5,086	$	4,407	15.4 %
Video		4,344			4,422	(1.8)%
Voice		399			457	(12.6)%
Residential revenue		9,829			9,286	5.8 %
Small and medium business		1,012			996	1.6 %
Enterprise		638			622	2.5 %
Commercial revenue		1,650			1,618	2.0 %
Advertising sales		344			365	(5.8)%
Mobile		492			258	90.7 %
Other		207			211	(2.0)%
Total Revenue		12,522			11,738	6.7 %
COSTS AND EXPENSES:
Total operating costs and expenses		7,577			7,342	3.2 %
Adjusted EBITDA	$	4,945	$	4,396	12.5 %
Adjusted EBITDA margin		39.5 %			37.4 %
Capital Expenditures	$	1,821	$	1,461
% Total Revenue		14.5 %			12.4 %
Net income attributable to Charter shareholders	$	807	$	396
Earnings per common share attributable to Charter shareholders:
Basic	$	4.22	$	1.91
Diluted	$	4.11	$	1.86
Net cash flows from operating activities	$	3,751	$	3,220
Free cash flow	$	1,855	$	1,371

Revenues

First quarter revenue increased by 6.7% year-over-year to $12.5 billion, driven primarily by growth in Internet and mobile revenues. Excluding advertising revenue, which benefited from political spend in the first quarter of 2020, revenue grew by 7.1% year-over-year.

Internet revenue grew by 15.4% year-over-year to $5.1 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 $4.3 billion in the first quarter, a decrease of 1.8% compared to the prior year period, driven by a higher mix of lower priced video packages within Charter's video customer base, lower bundled revenue allocation, lower pay-per-view and video on demand revenue and lower installation revenue, partly offset by promotional rate step-ups and rate adjustments.

Voice revenue totaled $399 million in the first quarter, a decrease of 12.6% compared to the first quarter of 2020. Factors impacting the year-over-year change in voice revenue included value-based pricing, a decline in wireline voice customers over the last twelve months and changes in bundled revenue allocation.

Residential revenue totaled $9.8 billion in the first quarter, an increase of 5.8% year-over-year.

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Commercial revenue increased by 2.0% year-over-year to $1.7 billion, driven by enterprise and SMB revenue growth of 2.5% and 1.6% year-over-year, respectively. Enterprise revenue growth was impacted by lower cell tower backhaul revenue. Enterprise retail revenue excluding wholesale revenue increased by 7.2% year-over-year, reflecting PSU growth. SMB revenue growth was partly reduced by some continuing COVID-19 related seasonal plans.

First quarter advertising sales revenue of $344 million declined by 5.8% compared to the year-ago quarter, driven by lower political revenue, partly offset by higher advanced advertising revenue. Excluding political revenue in both periods, advertising sales revenue increased by 5.3% year-over-year.

First quarter mobile revenue totaled $492 million, an increase of 90.7% year-over-year.

Other revenue totaled $207 million in the first quarter, a decrease of 2.0% year-over-year, driven by lower processing fees, partly offset by higher regional sports network revenue.

Operating Costs and Expenses

First quarter total operating costs and expenses increased by $235 million, or 3.2% year-over-year.

First quarter programming costs increased by $96 million, or 3.3% as compared to the first quarter of 2020, reflecting contractual programming increases and renewals, partly offset by a higher mix of lower cost packages within Charter's video customer base and lower pay-per-view expenses.

Regulatory, connectivity and produced content expenses increased by $49 million, or 8.9% year- over-year, primarily driven by higher sports rights costs as a result of more games played in the first quarter of 2021 compared to 2020.

Costs to service customers decreased by $44 million, or 2.4% year-over-year, despite year-over- year residential and SMB customer growth of 5.8%. The year-over-year decrease in costs to service customers was primarily driven by lower bad debt as a result of stimulus packages and lower market churn, partly offset by 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 decreased by $15 million, or 2.0% year-over-year.

First quarter mobile costs totaled $572 million, an increase of 52.8% year-over-year, and were comprised of device costs, customer acquisition costs, and service and operating costs.

Other expenses decreased by $49 million, or 5.5% as compared to the first quarter of 2020, primarily driven by a non-recurring adjustment to bonuses related to COVID-19.

Adjusted EBITDA

First quarter Adjusted EBITDA of $4.9 billion grew by 12.5% year-over-year, reflecting growth in revenue and operating expenses of 6.7% and 3.2%, respectively.

Net Income Attributable to Charter Shareholders

Net income attributable to Charter shareholders totaled $807 million in the first quarter of 2021, compared to $396 million in the first quarter of 2020. The year-over-year increase in net income attributable to Charter shareholders was primarily driven by higher Adjusted EBITDA, with a benefit from non-cash

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