Charter Communications reported declining second-quarter revenue as accelerating losses in its core residential internet business outweighed another period of strong Spectrum Mobile growth, reinforcing investor concerns about the competitive position of traditional cable broadband providers.

Revenue for the three months ended June 30 fell 1.7% from a year earlier to $13.53 billion. The result was broadly consistent with analysts’ expectations, but the composition of revenue showed continuing pressure on the services that have historically supported Charter’s profitability and customer relationships. Internet revenue declined, video revenue contracted sharply and average residential revenue per customer moved lower.

The company lost a net 172,000 Spectrum Internet customers during the quarter, compared with a loss of 116,000 in the second quarter of 2025. Residential internet accounts fell by 166,000, while the small-business operation lost 6,000. Charter ended June with 29.39 million internet customers, down 1.7% from approximately 29.91 million a year earlier.

The deterioration was also greater than the 120,000 internet customer loss recorded in the first quarter of 2026. Management said competition for new customers remained intense as telecommunications companies continued expanding fiber networks and fixed-wireless home internet services. Rather than relying solely on conventional broadband pricing, Charter has been attempting to compete through packages combining home internet, WiFi, mobile service and entertainment products.

Internet revenue declined 3.2% to $5.78 billion. Charter attributed the decrease to its smaller customer base and to pricing and packaging changes within the existing subscriber population, partly offset by more favorable allocation of revenue from bundled products. Internet remained the company’s largest individual revenue category, making its contraction particularly significant for the outlook for companywide sales and cash generation.

Spectrum Mobile continued to provide the clearest area of expansion. Charter added 406,000 mobile lines during the quarter, taking the total to 12.54 million. That represented growth of approximately 1.7 million lines, or 15.5%, over the preceding 12 months. Residential mobile lines reached 12.10 million, while small-business lines increased to 441,000.

Mobile additions nevertheless slowed from the 491,000 lines added during the second quarter of 2025. The business is still growing rapidly, but the comparison illustrates the difficulty of using wireless expansion to fully offset shrinking broadband and traditional television operations. Mobile service revenue increased 18.9% to $1.10 billion, driven by line growth and rate adjustments, while higher handset sales also contributed to growth in Charter’s other-revenue category.

Combined connectivity revenue, which includes internet and mobile service, declined 0.3% to $6.87 billion. That measure highlights the strategic balance Charter is attempting to manage: mobile revenue is rising at a double-digit rate, but it is growing from a much smaller base than internet revenue. The $174 million year-over-year increase in mobile service revenue was insufficient to counter the $193 million decline in internet revenue.

Charter’s mobile strategy is built around convergence. The company uses its WiFi network and a wholesale wireless arrangement to offer mobile plans primarily to broadband customers, allowing it to market a broader connectivity package and potentially reduce customer turnover. Management has also promoted a savings guarantee aimed at households moving multiple mobile lines from major national wireless carriers.

The second-quarter numbers showed that this model continues to attract wireless subscribers, but they did not demonstrate that mobile bundling had stabilized the broadband base. Investors have increasingly focused on whether stronger mobile penetration can improve internet retention, support household revenue and reduce acquisition costs. Continued internet losses leave that strategic proposition under scrutiny.

Charter’s video operation produced a more favorable subscriber comparison, although revenue remained under substantial pressure. The company lost 21,000 video customers during the quarter, considerably fewer than the 80,000 lost a year earlier. Total video customers stood at approximately 12.5 million, down 107,000, or 0.8%, over 12 months.

The improvement followed changes to pricing, packaging and the inclusion of several streaming applications within Spectrum television packages. Charter has sought to reposition its video service as an aggregator of conventional channels and direct-to-consumer streaming products, reducing the need for customers to manage separate subscriptions.

Despite the better customer trend, video revenue fell 9.7% to $3.15 billion. The decline reflected a greater mix of lower-priced packages, subscriber losses, bundled-revenue allocation and a larger amount of programming-related costs netted against reported video revenue. Charter allocated $251 million of costs associated with programmers’ streaming applications against video revenue, compared with $67 million in the year-earlier quarter.

That accounting effect contributed significantly to the company’s headline revenue decline. Charter said that excluding advertising revenue and the costs allocated to streaming applications, total revenue would have decreased 0.8%, rather than 1.7%. Even after adjusting for those items, however, the results still showed modest underlying contraction.

Total residential revenue fell 3.5% to $10.35 billion. Charter served 29.28 million residential customer relationships at the end of the quarter, 1.8% fewer than a year earlier. Monthly residential revenue per customer decreased 1.8% to $117.52. Excluding the streaming-application cost allocation, the decline in monthly residential revenue per customer was approximately 0.1%.

Across residential and small-business operations, Charter lost 184,000 customer relationships during the quarter, compared with a loss of 100,000 a year earlier. Total relationships fell to 31.50 million from 32.06 million. Customer penetration of the company’s estimated serviceable locations declined to 53.4% from 55.7%, indicating that network expansion has not yet translated into proportionate customer growth.

Some newer rural markets provided an offset. Charter activated 127,000 subsidized rural passings during the quarter and added 47,000 customer relationships within its subsidized rural footprint. The company has continued building into areas supported by federal, state and local broadband programs, creating opportunities to add customers where high-speed wired competition may be more limited.

Commercial revenue increased 1.5% to $1.87 billion. Small-business revenue rose 0.7%, while mid-market and large-business revenue advanced 2.8%. Advertising sales increased 12.3% to $416 million, helped by higher political advertising. Other revenue grew 7.1% to $894 million, primarily because of increased mobile device sales.

Operating expenses were broadly flat at approximately $8.08 billion on Charter’s adjusted presentation. Programming expenses declined 9.7%, reflecting video customer losses, contractual changes and the treatment of streaming-application costs. Those savings were offset by an 11.3% increase in other costs of revenue, including expenses associated with mobile service, device sales and advertising.

Charter also recorded $65 million of transition expenses related to preparations for its pending acquisition of Cox Communications. Excluding those costs, adjusted EBITDA declined 3.2%. Including them, adjusted EBITDA fell 4.3% to $5.45 billion from $5.69 billion a year earlier. The adjusted EBITDA margin narrowed to 40.3% from 41.4% as revenue contracted while operating costs remained essentially unchanged.

Net income attributable to Charter shareholders was $1.29 billion, compared with $1.30 billion in the second quarter of 2025. Lower adjusted EBITDA was largely offset by a gain connected with the repurchase of debt below its principal value. Income from operations fell to $3.06 billion from $3.28 billion, while net interest expense increased slightly to $1.28 billion.

Diluted earnings per share rose to $10.66 from $9.18 and exceeded the approximately $9.98 expected by analysts. The increase occurred despite the slight decline in net income because Charter’s basic weighted-average share count was 13.1% lower than a year earlier. The company repurchased 4 million Class A shares for $838 million during the quarter.

The earnings beat therefore did not resolve concerns about operating momentum. The market reaction remained focused on the faster internet subscriber decline, lower revenue and contracting adjusted EBITDA. Charter shares fell following the release, adding to a substantial decline that has reflected doubts about the long-term growth profile of the U.S. cable broadband industry.

Free cash flow also weakened modestly. Cash generated by operating activities increased 9% to $3.93 billion, helped primarily by lower cash tax payments. Free cash flow declined 7.4% to $969 million because of an unfavorable change in accrued capital-expenditure liabilities, partly offset by the improvement in operating cash flow.

Capital expenditures were nearly unchanged at $2.87 billion. Spending on network upgrades and rebuilds increased, while expenditure on line extensions declined. Charter is upgrading its network to provide symmetrical and multigigabit internet speeds throughout its service area and continues to expect the project to be completed in 2027.

The company maintained its expectation for approximately $11.4 billion of capital expenditures in 2026, excluding any effect from the Cox transaction. Management has indicated that spending should decrease materially after the current network evolution and rural construction programs move beyond their most capital-intensive stages. The timing and magnitude of that reduction will be important for Charter’s future free-cash-flow profile.

Charter ended the quarter with $93.8 billion in principal debt and $509 million in cash. Its credit facilities provided approximately $3.7 billion of additional available liquidity. During the quarter, the company repurchased debt with an aggregate principal amount of $1.2 billion for approximately $1 billion in cash, generating the extinguishment gain that supported reported net income.

The pending Cox Communications acquisition has added another major variable to the outlook. The transaction, valued at approximately $21.9 billion when announced, would significantly expand Charter’s scale and extend its converged internet, mobile and video strategy to Cox customers. Management said it was working toward completing the transaction in mid-to-late August, subject to the remaining closing conditions.

Charter expects the combination to create operating efficiencies and allow the expanded company to apply common products, pricing, network technology and customer-service systems across a broader footprint. It also sees an opportunity to raise mobile penetration among Cox customers. Integration costs, execution risks and the enlarged company’s leverage will remain central issues for investors.

For the remainder of 2026, the most important earnings indicator will be whether internet customer losses begin to moderate. Mobile growth, improved video retention and rural expansion provide potential offsets, but the second-quarter report demonstrated that none is yet large enough to neutralize contraction in the established residential broadband base.

The results also showed why earnings per share alone offers an incomplete picture of Charter’s performance. Share repurchases and debt-management gains helped produce a better-than-expected per-share result, while revenue, customer relationships and adjusted EBITDA all declined. Until the company can show that its converged product strategy is stabilizing internet subscriptions, investors are likely to continue treating mobile growth as a valuable but incomplete counterweight to broadband erosion.