Charter Earnings: Heavy Discounting Continues to Drive Customer Growth and Hit Margins

Charter’s differentiated and aggressive approach to the market showed clearly in its second-quarter results, with solid customer additions, weak revenue growth, and muted profitability. We still don’t like the firm’s deep discounting on broadband and wireless service with Spectrum One, which we think will challenge customer growth down the road. But we still believe Charter is well positioned to generate consistent cash flow over time. Our fair value estimate remains $580.