TWC shows big Q4 subscriber drain

Michelle Clancy | 31-01-2014

"We feel very good about our ability to run this business," Time Warner Cable CFO Artie Minson told investors this week, even as the company reported what can only be described as miserable subscriber figures for the fourth quarter of 2013.

The No 2 cable MSO shed 217,000 residential video customers in Q4, compared with the 129,000 it lost a year earlier. The company also gained only 39,000 Internet customers, down from 75,000 added one year ago, and just 1,000 residential voice subscribers, compared to 34,000 additions a year earlier.
For the full year, the results were magnified: TWC shed 833,000 video customers in 2013, while broadband customer additions slowed to 154,000 from 433,000 in 2012. And, the company lost 218,000 home phone customers last year, while it added 191,000 the previous year.
Nonetheless, a 5.6% decline in video revenue was offset by 14% higher broadband revenue, which the company brought in by raising its prices. Overall, the TWC managed to perform some damage control, with residential customer revenue declining just 0.1% to $4.58 billion.
The news comes as No 4 MSO Charter has an offer on the table to buy TWC for $132.50 per share. CEO Rob Marcus is not enthused, and has said the company needs at least $160 per share something Charter has tried to argue against by making the case that TWC is in dire straits operationally and needs a white knight.
Minson noted that the Q4 results will be used as fodder in the fight: The "folks at Charter and Liberty are very smart guys" he noted, and "see a chance to force a trade before the public realises what we can achieve with our standalone plan."
That standalone plan involves sinking 16% more capex into its infrastructure than originally planned for the year, to total $3.7 billion. That includes $100 million dedicated to the rollout of advanced technology in the company's main markets of New York and Los Angeles. It will also roll out 300mbps premium broadband tier, the company said. And, it will transition to all-IP within three years.
One bright spot was business services revenue, which spiked 20% to $616 million. Overall the results weren't terrible, fiscally: it had 5.3% year-over-year higher net income for the fourth quarter of 2013 to reach $540 million, on 1.7% higher revenue.