Key insights
- The post discusses the potential value trap in cable companies CABO and Charter due to high debt loads and concerns about accelerating subscriber losses in their broadband businesses. Charter's mobile growth is a mitigating factor, but the overall outlook is uncertain, with potential for free cash flow declines. The author seeks a bullish perspective on these companies.
This is kind of a lazy post but I’d love to discuss two broadband companies & see if I have a blind spot. It’s difficult to handicap subscriber losses but I’m hoping some you all can share your opinions. I feel like I know a lot about these companies but a consistent mistake I’ve made over the years is underestimating free cashflow drops in heavier debt loads.
Cabo has crazier ratios but less financial flexibility. With their acquisition the equity is trading dirt cheap but there is a chance they have serious debt issues in a few years
Charter also has a lot of debt. Is trading very cheap & has a large acquisition of Cox after merging with liberty broadband. Mobile is growing rapidly & if the pace of broadband losses stays where it’s at it’ll shrink but still throw off tons of money. The fear is accelerating losses.
Anyone looking at these & have an informed opinion. I could write a lot more but will save it for them comments if someone wants to discuss. I’d like to steal man a bullish outlook.