Charter Communications: Softer 2Q Reinforces Competitive Headwinds; Remain Neutral, PT to $150

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Charter Communications: Softer 2Q Reinforces Competitive Headwinds; Remain Neutral, PT to $150

, and continues to expect to reach that target within

three years of closing the Cox and Liberty Broadband transactions. As echoed by our

high-yield and investment-grade debt colleagues, we would have welcomed an even

lower target given recent EBITDA trends and the uncertainty surrounding Charter’s long-

term broadband market share. Further, citing an array of capital requirements tied to the

pending Cox and Liberty Broadband deals as well as organic needs, Charter has

temporarily paused share repurchases but expects buybacks to resume in 4Q26 while it

continues to delever throughout the process. Given the pause, management expects net

leverage to reach just above 3.9x by the end of 3Q pro forma for its Cox and Liberty

Broadband deals and the pending debt exchange.

• Cox deal close now expected by late August. Charter now expects to close the Cox

transaction in mid-to-late August, with the CPUC set to vote August 13. Management

framed the current implied transaction enterprise value for Cox at $27b, roughly 5x

transaction EBITDA, or 4.4x including $800m of run-rate transaction synergies, which

it now views as conservative and expects to grow to $1b after close. On the question of

additional M&A from here, or “what might come next,” CEO Winfrey noted that Charter

has a large transaction pending that he believes will create “significant value.” While we

believe a Charter-Comcast deal is likely over time, we do not anticipate one imminently,

as Charter will first need to begin integrating Cox, including the launch of new pricing

and packaging, stabilize subscriber and financial KPIs, and further delever before

entertaining a combination.