Charter touts spending on whole-network upgrades in investor day (NASDAQ:CHTR)

Charter Communications (NASDAQ:CHTR) said it planned over $10B in capital expenditures in aggregate next year, part of a plan to upgrade its subscriber footprint with faster speeds and better mobile device coverage.

New Chief Executive Officer Chris Winfrey – taking over for longtime chief Tom Rutledge – used Charter’s Tuesday evening Investor Day presentation to tout $5.5B in spending to upgrade the network for higher speeds for Charter customers.

The company plans $5.5B in “network evolution” spending, the bulk of which will land in 2024 and 2025 – and after which it’s expecting most of its service footprint to experience 5 Gbps downloads and 1 Gbps uploads.

Surprisingly, Winfrey says the cost of that upgrade will be just about $100 per home passed – some 90% lower than if Charter had decided to replace its coaxial lines with fiber-optics, and cheaper than Comcast’s plan to use amplifiers for upgrades (which comes in about $200 per home passed).

Charter’s network already goes through 55M passings, with 500M connected devices to the network every day, Winfrey said.

“We have gigabit (service) everywhere we offer it; we didn’t upgrade just portions” of the network “where it was attractive. We upgraded everywhere, and that’s not what our competitors have done,” Winfrey said.

“We have great products and the fastest Internet, the fastest Wi-Fi, fastest mobile overall speeds, and we’re the fastest growing mobile provider,” he said.

Winfrey also touted the company’s long-term plan over rivals. “As everybody knows, we have fiber overbuilders today,” he said. “Now, I’ve never seen an overbuilder in my years of cable that’s actually had a great [return on investment], but history has a tendency to repeat itself.”

On service rivals like T-Mobile (NASDAQ:TMUS) and Verizon (NYSE:VZ) and their fixed wireless broadband alternatives, “they’re new – which is the challenge,” Winfrey said. The reality is that “their ability to scale either from a penetration or usage perspective is going to be limited.”

And as for wireless and his plans to go gigabit wireless across the footprint, Winfrey says “Take AT&T (NYSE:T). Big, national wireless operator, but their wireline coverage – what, maybe 40%? Of which a third, maybe, is upgraded?

“So they don’t have a path to a ubiquitously converged product today; as far as I can see, they don’t have a path to that in the future. And even if they could – remember 70% roughly of their revenue is tied to mobile at very high prices. So it’s very difficult for them to follow where we go,” he said.

For 2023, the company plans some $6.5B-$6.8B on core expenditures, and another $4B on line extensions – that’s up from about $9B in aggregate capex in 2022.

Charter is looking to tap some of the nearly $100B in federal funding to expand broadband Internet service to underserved areas – notably more than $20B available through the Rural Digital Opportunity Fund and $42.5B through the Broadband Equity, Access and Deployment Program.

Beyond 1M in RDOF passings, Winfrey says the company is committing to tap state grants for another 160,000.