Chapter 1

Business and Balance Sheet

Bottom line. Charter sells broadband, mobile, video and voice under the Spectrum brand to about 31.7 million customers across 41 states. In FY2025 it turned $54.8 billion of revenue into $22.7 billion of Adjusted EBITDA and $5.0 billion of free cash flow, against $94.6 billion of debt. Revenue has been flat for four years, broadband subscribers have fallen for two, and the listed equity is now roughly one-seventh of enterprise value.

What the company sells

Charter is a cable operator. It owns a hybrid fibre-coaxial network that reaches 58 million homes and businesses across 41 states, and it sells connectivity over that network under the Spectrum brand [1]. The capital is sunk; the economics turn on how many of those 58 million passings buy service, and how many products each buyer takes.

At the end of 2025 that was 31.85 million customer relationships — 29.68 million taking internet, 12.61 million taking video, 6.05 million taking wireline voice, and 11.77 million mobile lines riding on a wholesale agreement rather than Charter's own spectrum [2]. The average residential customer paid $119.05 a month [3].

Source: FY2025 Annual Report (Form 10-K), Management Discussion and Analysis — Revenues by service offering [4].

Two lines carry the business. Internet alone was $23.8 billion of FY2025 revenue and grew 1.7%; video was $13.7 billion and fell 9.4% [5]. Mobile is the fast-growing line — $3.8 billion, up 22.0% — but it is still only 7% of revenue and is resold over another carrier's network [6]. Commercial services, at $7.3 billion, grew 0.9%. Video's decline is partly presentational: $322 million of the FY2025 fall came from costs allocated to programmers' streaming apps and netted inside video revenue rather than from lost customers [7].

The subscriber turn

Broadband subscriber counts drive the model, and they changed direction two years ago. Total internet customers grew through 2023, to 30.59 million [8]. They fell in 2024, when residential internet customers dropped 510,000 as the federal Affordable Connectivity Program subsidy wound down [9]. They fell again in 2025, by a further 393,000 residential [10]. In the first quarter of 2026 the loss ran at 120,000 for the quarter, against 59,000 in the same quarter of 2025 [11].

Sources: FY2023 Form 10-K, customer statistics [12]; FY2025 Form 10-K, customer statistics [13]; Q1 2026 results release [14].

Mobile is the offset, and it is a real one: lines more than doubled from 5.29 million at the end of 2022 to 12.13 million at the end of the first quarter of 2026 [15] [16]. But mobile adds are also decelerating — 368,000 in the first quarter of 2026 against 507,000 a year earlier — and each mobile line carries a wholesale cost that a broadband line does not [17].

Penetration is the cleanest measure of the squeeze. Charter's estimated passings grew 2.6% over the year to 58.66 million, with subsidised rural construction supplying more than 483,000 of that gain [18], while customer relationships fell 1.5%. Penetration of passings went from 56.3% to 54.0% [19]. The company is building past more homes and selling to a smaller share of them.

What the business earns

Sources: FY2023 Form 10-K, consolidated statements of operations [20] and Adjusted EBITDA and free cash flow reconciliation [21]; FY2025 Form 10-K, consolidated statements of operations [22] and Adjusted EBITDA and free cash flow reconciliation [23].

Revenue has moved within a $1.1 billion band for four years: $54.0 billion in 2022 and $54.6 billion in 2023 [24], then $55.1 billion in 2024 and $54.8 billion in 2025, a decline of 0.6% [25]. Adjusted EBITDA has ground higher across the same span, from $21.6 billion to $22.7 billion, on cost discipline rather than growth [26] [27].

What the reader should hold onto is the gap between EBITDA and cash. Charter spent $11.7 billion of capital in 2025 — 21% of revenue — on a network upgrade to symmetrical multi-gigabit speeds and on subsidised rural line extensions [28]. After that capital and $5.04 billion of net interest [29], $22.7 billion of Adjusted EBITDA became $5.0 billion of free cash flow [30]. Capital expenditure and net interest alone absorb roughly 73 cents of every EBITDA dollar; cash taxes and working capital take most of the rest.

That is also why free cash flow is the volatile line in the chart while EBITDA is not. The 2023 drop to $3.5 billion and the 2025 recovery to $5.0 billion were driven by capex timing, working capital on mobile devices, and cash taxes — not by the operating business [31].

The balance sheet

Sources: debt principal at 31 March 2026 per the Q1 2026 results release [32]; free cash flow per the FY2025 Form 10-K [33]; equity value and multiple derived from the 22 July 2026 closing price and the 126,631,549 Class A shares outstanding reported in the FY2025 Form 10-K [34].

Charter's debt principal was $94.6 billion at the end of 2025 and $94.3 billion at the end of March 2026, against $517 million of cash and $4.6 billion of undrawn revolver [35] [36]. Net debt to trailing Adjusted EBITDA was 4.15 times, inside management's stated 4.0 to 4.5 times range [37].

There were 126,631,549 Class A shares outstanding at the end of 2025 [38], of which 4.3 million were bought back in the first quarter of 2026 for $963 million [39], at an average price of $225 a share [40]. At the 22 July 2026 close of $129.22, roughly 122 million remaining shares are worth about $15.8 billion. Advance/Newhouse Partnership holds exchangeable units representing an effective common interest of about 11%, which adds roughly $1.9 billion of economic equity outside the listed shares [41]. On those figures enterprise value is near $111 billion and debt is about 84% of it; the trailing multiple is roughly 4.9 times Adjusted EBITDA.

That ratio matters for everything that follows. With the equity at one-seventh of enterprise value, a 5% move in Adjusted EBITDA — about $1.1 billion — changes enterprise value by roughly $5.5 billion at a constant multiple, or about a third of the equity. The operating business is stable; the equity claim on it is not.

The maturity ladder

Source: FY2025 Annual Report (Form 10-K), Notes — Liquidity and Future Principal and Interest Payments [42].

There is no near-term wall. Only $1.06 billion of principal falls due in 2026 and $3.56 billion in 2027; $63.5 billion sits beyond 2030 [43]. The pressure is price, not date. Charter's fixed-rate book of $82.7 billion carries an average coupon of 5.07% [44]; in January 2026 the company issued $1.75 billion at 7.000% due 2033 and $1.25 billion at 7.375% due 2036, and used the proceeds to retire notes carrying 5.500% and 5.125% [45]. $31.1 billion of principal — a third of the book — comes due by 2030 [46]; refinanced at roughly two points higher, that adds on the order of $600 million to annual interest by 2030, or about 12% of FY2025 free cash flow.

The bond market has already marked this. The $82.7 billion fixed-rate book was carried at a fair value of $73.7 billion at the end of 2025 [47]. Most of that $9.0 billion discount is the arithmetic of low coupons on very long paper against today's yields rather than a distress signal — but it is the same repricing seen from the other side.

What the equity has done

Source: CHTR daily closing prices, as reported; 2016–2025 are year-end closes, 2026 is the 22 July close.

The stock peaked at $821.01 on 2 September 2021 and closed at $129.22 on 22 July 2026 — a decline of 84%. It has fallen in five of the last six calendar years. The steepest single move was on 24 April 2026, when first-quarter results took the shares from $241.78 to $180.13 in a day, with a further slide to $129.22 over the following three months.

The buyback record is the other half of that arithmetic. Between the programme's start in September 2016 and the end of 2025, Charter repurchased about 179.7 million shares and Charter Holdings units for approximately $78.8 billion — an average of roughly $438 a share [48]. The whole listed equity is worth about $15.8 billion today. The defence is that the buybacks did what they were designed to do: basic weighted average shares fell from 183.7 million in FY2021 to 135.2 million in FY2025 [49] [50], and diluted earnings per share rose from $24.47 to $36.21 over the same period while net income barely moved [51] [52]. Both readings are true, and the tension between them belongs to a later chapter. What matters here is the shape it left: a business financed with far more debt than equity, and an equity whose value moves as a small residual on a much larger debt claim.

Two changes already in motion

Two structural events are close enough to matter to any current estimate.

The Cox transaction, agreed on 16 May 2025, has Cox Enterprises contribute Cox Communications' residential cable business to Charter Holdings and sell its commercial fibre and managed-IT and cloud businesses to Charter [53], with Charter funding $4.0 billion of cash consideration with debt and assuming roughly $12.6 billion of Cox net debt and finance leases [54]. Cox Enterprises would hold about 25.1% of the combined entity's diluted shares [55]. On the April 2026 call management said all federal and state approvals were in hand except California's, and that it was working towards a summer close [56]. Run-rate operating-expense synergies were put at at least $800 million, and the share count at close, as-converted and as-exchanged, at about 179 million [57]. Any per-share number computed on today's 122 million shares is therefore provisional.

The capital cycle is the second. Charter expects 2026 capex of about $11.4 billion, and management has said that once the network-evolution and rural-expansion programmes conclude, run-rate capital expenditure should fall below $8 billion a year — a reduction it put at more than $28 of free cash flow per share on the current count [58] [59]. Against a $129.22 share price, that one item is worth more than a fifth of the current price in annual cash flow. It is also a management projection about spending three years out, made while the same management guided weighted average cost of debt at 5.2% and run-rate annualised cash interest at $4.9 billion [60] — a figure that rises as the 5.07% book reprices toward 7%.

What this report examines

Charter is a mature, cash-generative network business whose operating results move slowly and whose equity moves violently, because the equity is a thin residual on top of $94 billion of debt. Both of the near-term swing factors are large and point in opposite directions: capital spending is set to fall by roughly $3.7 billion a year, and the cost of the debt is set to rise as a 5.07% book reprices at 7%.

This report examines whether Charter's free cash flow — rising as a multi-year capital programme ends, falling as low-coupon debt reprices — can stabilise a shrinking broadband base and reduce $94 billion of debt fast enough to leave value in an equity now worth about one-seventh of enterprise value.

The strongest fact against a pessimistic reading is that the operating base has not broken: Adjusted EBITDA was $22.7 billion in 2025, up from $21.6 billion in 2022, and free cash flow rose in each of the last two years [61] [62]. The strongest fact against an optimistic one is that the first quarter of 2026 showed revenue down 1.0%, Adjusted EBITDA down 2.2% and free cash flow down 12.3% year over year, with internet losses running at double the prior-year rate [63] [64]. One quarter of stabilising broadband losses alongside the capex step-down would change the arithmetic materially; a second year of accelerating losses would change it the other way.