Spectrum, operated by Charter Communications (CHTR) , is suffering from a budding consumer trend at a time when it is already losing revenue from the popular cord-cutting trend that has negatively affected its cable business.
The company’s fourth-quarter earnings report for 2024 revealed that its total customer relationships shrank by 2% year over year.
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Spectrum’s cable business suffered a 7.4% year-over-year revenue decline as it lost 123,000 customers during the quarter. This was not surprising since many consumers have been cord-cutting (ditching cable for streaming platforms) for years.
Related: Spectrum is relying on a generous offer to win back customers
However, Spectrum did flag that during the quarter, it also lost a whopping 177,000 internet customers, which is more than the 110,000 internet customers it lost during the previous quarter. The recent decrease appears to have had a significant impact on the company’s internet revenue during the fourth quarter as it only grew by a measly 0.9% year over year.
The steeper loss in internet customers is indeed unexpected since internet service remains a staple in households and is needed in order to use streaming services, which have increased in popularity.
Spectrum calls out main sources of the problem
During the company’s earnings call on Jan. 31, Charter Communications Chief Financial Officer Jessica Fischer claimed that over 20,000 of the internet losses were related to Hurricane Helene, which impacted Florida, the Carolinas, and the broader Southeast in September, and Hurricane Milton, which hit Central Florida the following month.
She also said that the end of the Affordable Connectivity Program (ACP), which was discontinued last February, resulted in a loss of about 140,000 internet customers. ACP was a government program that provided eligible households a discount of up to $30 a month for internet service.
“The end of the ACP program drove higher fourth quarter non-pay and voluntary churn among former ACP customers for a total estimated fourth quarter ACP impact of approximately 140,000 internet losses, primarily non-pay disconnects and some voluntary churn,” said Fischer.
The loss in internet customers comes after Spectrum raised its monthly internet prices by $3 to $4, depending on the plan, in July last year. This move infuriated customers who took to social media to express frustration over Spectrum’s annual price hikes, and some even threatened to leave the company as a result of the change.
Related: Spectrum makes a desperate move to win back fleeing customers
Spectrum later rolled out “a new and simplified pricing strategy” in September that offers customers internet for a starting price of $30 a month when bundled with mobile or video services. Pricing plans for internet services are also guaranteed for up to three years.
During the earnings call, Charter CEO Chris Winfrey claimed that the bundle yielded positive results in retaining broadband customers. As a result, Spectrum will continue to explore bundling its services in order to attract and retain new customers, and promote other areas of its business.
“Over time, as our capabilities increase, our selling capabilities, and training to re-bundle these services is enhanced, I think it gives us real benefits not just to video, but also into broadband and to mobile,” said Winfrey.
The problems in Charter’s cable and internet business was more than offset by a roughly 37% jump in mobile service revenue and a 26% gain in ad sales. Those gains were robust enough to cheer investors. The shares were up 2.6% on Jan. 31 to $345.49. But they were down 6% for the week.
Spectrum isn’t the only victim of the growing trend
Spectrum isn’t the only company suffering from a sharp decline in internet customers. One of its main competitors, Comcast (CMCSA) , revealed in its fourth-quarter earnings report for 2024, released on Jan. 30, that it lost about 139,000 broadband customers.
Shortly after the news, Comcast’s shares fell by 11% on Jan. 30.
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Comcast President Mike Cavanagh stated during a recent earnings call that the loss was “disappointing and worse” than previously expected. In response to the significant decrease, Comcast said that it will also explore bundling its wireless and internet services with new prices in the next few months.
The exodus of internet customers comes during a time when Comcast and Spectrum are facing increased competition from Verizon, AT&T and T-Mobile, which are all offering their customers fixed wireless access (FWA) internet service. FWA internet provides high-speed internet connection that uses radio signals instead of cables.
It has the capability to provide internet access to remote or underserved areas where internet through cable is not available. FWA internet is also offered at a cheaper price than traditional internet services.
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