Charter Juices Wireless Growth in Fourth Quarter but at a Cost; Stock Remains Undervalued

Charter’s Spectrum One offering appears to have driven strong wireless customer growth, with some benefit to the core broadband business as well. The firm added 615,000 net wireless customers during the fourth quarter (to 5.3 million), by far its best performance to date. However, we still have questions around the profitability of the wireless effort and how sticky these customers will be once promotional periods end, especially among those looking for a phone subsidy. We’re leaving our Charter fair value estimate at $580 and continue to believe the stock is undervalued, though we still prefer Comcast among cable companies.