Charter (CHTR) Q1 2026 earnings review
Core Broadband Bleeds as Mobile Savior Loses Momentum
Charter's Q1 2026 results reveal a heavily pressured core business and a fracturing growth narrative. Internet customer losses worsened to 120,000, but more alarmingly, the growth of its primary offset—Spectrum Mobile—decelerated sharply to just 368,000 lines (down from 507k a year ago). While EPS grew to $9.27, this was entirely engineered by a massive 11.4% reduction in share count; actual Net Income fell 4.4%. Furthermore, despite management's repeated promises throughout 2025 that the company had passed 'peak CapEx,' Q1 2026 Capital Expenditures spiked 19% YoY to $2.85 billion, crushing Free Cash Flow by 12%. The only bright spot was video, where losses stabilized, but that is insufficient to carry the broader connectivity ecosystem.
🐂 Bull Case
Video customer losses improved to just 60,000 (compared to a loss of 181,000 in 25Q1). The inclusion of streaming apps (Disney+, Hulu, Peacock) in TV Select is successfully slowing churn and transforming a liability into a retention tool.
Management continues to aggressively buy back stock at depressed valuations, repurchasing 4.3 million shares for $963 million in the quarter. The 11.4% YoY reduction in share count mathematically props up EPS.
🐻 Bear Case
Internet relationships continue to bleed (-120k this quarter). Charter is failing to offset low housing moves and intense FWA/fiber competition despite aggressive pricing bundles.
Mobile line growth dropped 27% YoY. If the mobile convergence strategy fails to attract new households at its historical pace, Charter loses its primary lever to reduce internet churn.
⚖️ Verdict: 🔴
Bearish. Top-line revenue and Adjusted EBITDA are both contracting, while CapEx is expanding against management's prior guidance. The multi-year 'FCF inflection' narrative is becoming harder to believe with core operating metrics deteriorating.
Key Themes
The 'Peak CapEx' Narrative Contradiction
Throughout 2025, management insisted that 2025 was the 'peak year of capital expenditure' ($11.7B) and that future FCF would 'take off' as spending declined. Yet, Q1 2026 CapEx surged 19% YoY to $2.85 billion. This resulted in Free Cash Flow dropping 12.3% YoY. If network evolution and line extensions require sustained heavy capital, the promised FCF inflection is an illusion.
Mobile Growth Deceleration
Charter added 368,000 mobile lines in 26Q1—its lowest quarterly performance in over a year, significantly decelerating from 507,000 lines a year ago. Management's long-term strategy relies entirely on converged (Internet + Mobile) households to lower churn. This deceleration suggests the heavy device subsidies from big telco competitors are finally eroding Charter's momentum.
Rural Subsidized Buildout Execution
Charter continues to successfully execute its rural expansion, activating 89,000 subsidized rural passings in Q1. Total customer relationships within this subsidized footprint grew by 41,000. This remains the only reliable source of volumetric net additions for the company.
Invincible WiFi 7 and Product Innovation
In February 2026, Charter launched 'Invincible WiFi,' featuring a tri-band WiFi 7 router with integrated 5G cellular and battery backup. This premium hardware directly targets reliability concerns and differentiates the service from basic FWA routers, serving as a critical retention tool for high-value households.
Margin Compression and Programming Costs
Adjusted EBITDA declined 2.2% YoY, driven by higher mobile direct costs and mobile device sales. While programming costs technically decreased 9.3%, this was heavily distorted by $218 million in costs allocated to programmer streaming apps and netted against video revenue (up from $47M a year ago). Stripping out accounting allocations, underlying margins are compressing.
Macro Environment Squeezing Gross Adds
The company continues to face a vicious cycle of macro headwinds: low housing move rates restrict the 'at-bats' needed to win new customers, while aggressive telco fixed-wireless and fiber overbuilds capture a larger share of the few movers available. Management's new $1,000 savings guarantee is a desperate (and potentially expensive) attempt to force customers to switch outside of normal moving windows.
Other KPIs
Decelerating. Down 2.7% YoY. Monthly residential revenue per customer also fell 1.4% to $118.44. While the company claims this is largely an accounting artifact of allocating streaming app costs against video revenue, the reality is that the core residential connectivity base is shrinking and monetizing at slightly lower rates.
Stable. Up 1.0% YoY, driven by a 2.1% increase in Mid-Market & Large Business revenue. Small Business revenue grew an anemic 0.2%, heavily impacted by a YoY decline in Small Business customer relationships, indicating competitive pressures are bleeding into the SMB segment.
Accelerating overall (+5.3% YoY) purely due to political revenue. However, excluding political cycles, the core advertising business remains structurally impaired, declining 3.4% YoY due to a secular drop in linear TV advertising.
Guidance
Stable compared to 2025 actuals, but contradicts the 'rapid decline' narrative sold to investors in 2025. This figure excludes impacts from the pending Cox transaction. If network evolution speed upgrades stretch out, CapEx will remain elevated for longer than anticipated.
Key Questions
The CapEx Contradiction
You guided investors for over a year that 2025 was peak CapEx and 2026 would see a rapid decline driving free cash flow. Yet Q1 CapEx just rose 19% YoY. What specific projects required this upfront load, and when exactly will investors see the CapEx step-down in the quarterly run-rate?
Mobile Deceleration Drivers
Mobile line net adds fell to 368,000—the lowest in recent history. Is this a function of lower gross broadband additions restricting the top-of-funnel, or are telco competitors successfully countering with heavier device subsidies?
SMB Competitive Bleed
Small Business customer relationships continue to decline YoY. Are you seeing FWA competitors pivot their aggressive residential playbook into the SMB space, and how do you plan to defend this high-margin segment?
$1,000 Guarantee Economics
With the launch of the '$1,000 savings guarantee' to poach telco customers, how much margin compression should we expect from these aggressive buyout/guarantee structures if adoption scales?