ST. LOUIS--(BUSINESS WIRE)--Nov. 1, 2001--Charter Communications, Inc. (Nasdaq:CHTR) today reported double-digit revenue and operating cash flow growth for the third quarter of 2001 resulting from continued consumer demand for broadband services. These results were highlighted by the addition of a record number of new cable modem customers during the third quarter.
Demand for Advanced Services Remains Strong
As of Sept. 30, 2001, Charter Digital Cable(TM) customers totaled 1,951,200. Third quarter weekly additions were higher than second quarter, averaging 19,400 per week. "Despite the weakening economy, Charter continues to experience strong demand for its digital video service," said Carl Vogel, President and CEO. "The addition of advanced broadband products like video on demand (VOD) and Wink's Enhanced Broadcasting service continue to enhance customer satisfaction and provide the glue necessary to retain digital customers," he said.
"Our target is to end the year 2001 with more than 2,150,000 digital cable customers," he continued. "The effective sales and marketing initiatives we're undertaking to grow our digital customer base provide a foundation for continued revenue and cash flow growth as enhanced services are added to the digital video platform. I'm confident we'll end the year with over 30% digital penetration of our basic customer base."
Charter continues to lead the industry in the roll-out of VOD technology. With recent launches in Glendale, Calif. and Birmingham, Ala., Charter now provides VOD technology in 10 markets, including the suburbs of Atlanta; the Pasadena and Long Beach areas of Los Angeles; St. Louis; Fort Worth; the Greenville-Spartanburg, S.C. area; Hickory, N.C.; and Slidell, La. Mr. Vogel said Charter expects to pass some 2,200,000 million homes by the end of 2001 with VOD service.
Two-way high-speed data service was available to 56% of Charter's homes passed as of Sept. 30, 2001. As of that date, Charter served 545,900 data customers, having added more than 102,000 Charter Pipeline(TM) customers during the third quarter. "We added nearly 30% more data customers during the third quarter than we did during the second," Mr. Vogel said. "We're focused on increasing our data penetration as we continue to rebuild and upgrade with an advanced two-way architecture. Customers who buy both our video and data service tend to be more satisfied and are less likely to churn." Charter expects to end the year with over 630,000 data customers.
"We're effectively competing against digital subscriber line (DSL) service, despite false and misleading advertising campaigns by the DSL competition," Mr. Vogel said. In response to a suit filed by Charter, a Federal judge recently issued a preliminary injunction ordering Southwestern Bell to refrain from false and misleading advertising about cable modem service. "The decision clearly discredits Southwestern Bell's claim that its DSL service offers some technological advantage over cable modem service. It's just not the case," continued Mr. Vogel. "Certain DSL providers have recently scaled back plans to provide service deeper into their networks, which is clearly an indication that cable modem service provides a competitive threat to DSL providers," Mr. Vogel said.
Third Quarter Financial Highlights
For the third quarter of 2001, revenue increased more than 13% to $1.04 billion, and operating cash flow increased more than 10% to $467.5 million compared to pro forma results for the third quarter of 2000. Charter continued to pace the industry with internal customer growth of 1.1% compared to pro forma third quarter of 2000 for a total of 6,970,100 customers. "Basic customer growth has slowed after a planned reduction in discounting and basic service marketing efforts, part of a previously announced strategic shift of focus to advanced services that will better enhance operating cash flow growth. This focus is starting to pay off, as evidenced by our impressive advanced services growth. I'm especially proud of the men and women of Charter for their perseverance in these challenging times," Mr. Vogel said.
Due to current economic factors, Charter has lowered its guidance for fourth quarter and year 2001 revenue and operating cash flow growth. Revenue growth for the year is expected to be in the 12.5% to
13.5% range, and operating cash flow growth between 10% and 11%. Charter expects to remain among industry leaders in internal customer growth for the year 2001 with approximately 1% growth. "I'm confident in our business for the long run. As the economy and consumer confidence slows, we may experience some pressure in the short term, but as we stay the course, I'm optimistic that revenue and operating cash flow growth rates will remain strong for the remainder of this and future years," Mr. Vogel said.
About Charter Communications
Charter Communications, a Wired World(TM) company, is among the nation's largest broadband communications companies, currently serving some 7 million customers in 40 states. Charter provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform marketed under the Charter Digital Cable(TM) brand and high-speed Internet access via Charter Pipeline(TM). Commercial high-speed data, video and Internet solutions are provided under the Charter Business Networks(TM) brand. Advertising sales and production services are sold under the Charter Media(TM) brand.
A Fortune 500 company, Charter is the 2001 recipient of the Outstanding Corporate Growth Award from the Association for Corporate Growth, the 2001 R.E. "Ted" Turner Innovator of the Year Award from the Southern Cable Telecommunications Association, and the 2000 Innovator Award for Technology from Cablevision Magazine.
More information about Charter can be found at www.charter.com.
Detailed financial information is included in the attached addendum.
Charter will conduct a conference call to discuss their operating results on Thursday, November 1, 2001, at 11:00 AM Eastern Time. The call will be available live via webcast at www.charter.com. The call will be available on the "Investor Center" portion of the website, via "About Us." Participants should go to the call link at least 10 minutes prior to the start time to register. The call will be archived on the website.
Statements in this press release regarding Charter Communications' business that are not historical facts may be "forward-looking statements." Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from any such forward-looking statements are identified in the reports and documents Charter files from time to time with the U.S. Securities and Exchange Commission.
|Charter Communications Inc., St. Louis
|Andy Morgan, 314/543-2217 (Media)
|Mary Jo Moehle, 314/543-2397 (Analysts)