CCO Holdings LLC

04/24/2026 | Press release | Distributed by Public on 04/24/2026 05:07

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
General
CCO Holdings, LLC ("CCO Holdings") is a holding company whose principal assets are the equity interests in its operating subsidiaries. CCO Holdings is a direct subsidiary of CCH I Holdings, LLC, which is an indirect subsidiary of Charter Communications, Inc. ("Charter"), Charter Communications Holdings, LLC ("Charter Holdings") and Spectrum Management Holding Company, LLC. All of the outstanding capital stock of CCO Holdings Capital Corp. is owned by CCO Holdings. The consolidated financial statements include the accounts of CCO Holdings and all of its subsidiaries where the underlying operations reside. All significant intercompany accounts and transactions among consolidated entities have been eliminated
We are a leading broadband connectivity company with services available to nearly 59 million homes and small to large businesses across 41 states through our Spectrum brand. We have evolved from providing cable TV to streaming, and from high-speed Internet to a converged broadband, WiFi and mobile experience. Over the Spectrum Fiber Broadband Network and supported by our 100% U.S.-based employees, we offer Seamless Connectivity and Entertainment with Spectrum Internet, Mobile, TV and Voice products.
The Cox Transactions
On May 16, 2025, Charter, Charter Holdings, and Cox Enterprises, Inc. ("Cox Enterprises") entered into a Transaction Agreement (the "Transaction Agreement") pursuant to which (i) Cox Enterprises will sell and transfer to Charter 100% of the equity interests of certain subsidiaries of Cox Communications, Inc. ("Cox Communications") that conduct Cox Communications' commercial fiber and managed IT and cloud services businesses (the "Equity Sale"), (ii) Cox Enterprises will contribute the equity interests of Cox Communications and certain other assets (other than certain excluded assets) primarily related to Cox Communications' residential cable business to Charter Holdings (the "Contribution"), and (iii) Cox Enterprises will pay $1.00 to Charter (collectively, the "Cox Transactions"). Under the Transaction Agreement, Charter and Cox Enterprises may designate one or more wholly owned subsidiaries to take actions with respect to Charter and Cox Enterprises, respectively.
Pursuant to the Transaction Agreement, at the closing of the Cox Transactions (the "Closing"):
•in consideration of the Equity Sale, Charter will pay $3.5 billion in cash to Cox Enterprises;
•in consideration of the Contribution, Charter Holdings will (i) pay to Cox Enterprises $650 million in cash and (ii) issue to Cox Enterprises convertible preferred units of Charter Holdings with an aggregate liquidation preference of $6.0 billion, which will pay a 6.875% dividend per annum, and approximately 33.6 million Charter Holdings common units. The Charter Holdings convertible preferred units will be convertible into Charter Holdings common units, with an initial conversion price of $477.41, subject to certain adjustments. The Charter Holdings common units will be exchangeable by the holder, in certain circumstances, for cash or, at the election of Charter, Charter Class A common stock on a one-for-one basis, subject to certain adjustments; and
•in consideration of the $1.00 payment from Cox Enterprises to Charter, Charter will issue to Cox Enterprises one share of the newly created Charter Class C common stock. The Charter Class C common stock will be equivalent, economically, to the outstanding Charter Class A common stock and the Charter Class B common stock but will have a number of votes per share that reflect the voting power of the Charter Holdings common units and the Charter Holdings convertible preferred units held by Cox Enterprises on an as-converted, as-exchanged basis.
The combined entity will assume Cox Communications' approximately $12.4 billion in outstanding net debt and finance leases.
Overview
The competitive environment continued to challenge Internet customer growth in the first quarter of 2026 with a loss of 120,000 Internet customers. Mobile lines grew by 368,000 while video and voice customer losses improved versus the prior year period as customers find value in bundling our seamless connectivity and entertainment products. Our core strategy is to deliver great products, at a great value, while continuously improving service. We remain focused on improving customer results through the power of our advanced fiber-powered network and cutting-edge connectivity products and services, and our simplified pricing and packaging strategy that better utilizes our seamless connectivity and entertainment products to offer lower promotional and persistent bundled pricing to drive growth. Our Internet and mobile product bundles provide a
differentiated connectivity experience by bringing together Spectrum Internet, Advanced WiFi and Unlimited Spectrum Mobile to offer consumers fast, reliable and secure online connections on their favorite devices at home and on the go in high-value packages. We have completed deals with major programmers to deliver better flexibility and greater value to our customers by including seamless entertainment applications with certain of our Spectrum TV packages at no additional cost. We offer the sale of these seamless entertainment applications to customers on an à la carte basis, and through our digital storefront, the Spectrum App Store, customers can easily activate, upgrade, buy and manage their streaming applications in one place. We also continue to develop other elements of our video product and are deploying Xumo stream boxes to new video customers.
Our customer commitments focus on reliable connectivity, transparency, exceptional service and always improving. By continually improving our product set and offering consumers the opportunity to save money by switching to our services, we believe we can continue to penetrate our expanding footprint and sell additional products to our existing customers. We see operational benefits from the targeted investments we made in employee wages and benefits to build employee skill sets and tenure, as well as the continued investments in digitization of our customer service platforms, all with the goal of improving the customer experience, reducing transactions and driving customer growth and retention.
We currently offer Spectrum Internet products with speeds up to 1 Gbps across our entire footprint and multi-gigabit data speeds in a portion of our footprint. Our network evolution initiative remains on track to deliver symmetrical and multi-gigabit speeds across our entire footprint with convergence everywhere we operate. We spent $427 million on our subsidized rural construction initiative during the three months ended March 31, 2026 and activated approximately 89,000 subsidized rural passings.
We realized revenue, Adjusted EBITDA and income from operations during the periods presented as follows (in millions; all percentages are calculated using whole numbers; minor differences may exist due to rounding):
Three Months Ended March 31,
2026 2025 % Change
Revenues $ 13,597 $ 13,735 (1.0) %
Adjusted EBITDA $ 5,618 $ 5,738 (2.1) %
Income from operations $ 3,196 $ 3,220 (0.7) %
Adjusted EBITDA is defined as net income attributable to CCO Holdings member plus net income attributable to noncontrolling interest, interest expense, net, income taxes, depreciation and amortization, stock compensation expense, other income (expenses), net and other operating (income) expenses, net, such as special charges, merger and acquisition costs and (gain) loss on sale or retirement of assets. See "Use of Adjusted EBITDA and Free Cash Flow" for further information on Adjusted EBITDA and free cash flow.
Total revenues decreased $138 million during the three months ended March 31, 2026 compared to the corresponding period in 2025 primarily due to higher seamless entertainment allocation, partly offset by growth in connectivity revenue. Adjusted EBITDA and income from operations were also negatively impacted by one-time favorable adjustments of $75 million in the first quarter of 2025.
The following table summarizes our customer statistics for connectivity, Internet, mobile, video and voice as of March 31, 2026 and 2025 (in thousands except per customer data and footnotes).
Approximate as of
March 31,
2026 (a)
2025 (a)
Customer Relationships (b)
Residential 29,452 29,914
Small Business 2,231 2,246
Total Customer Relationships 31,683 32,160
Monthly Residential Revenue per Residential Customer (c)
$ 118.44 $ 120.07
Monthly Small Business Revenue per Small Business Customer (d)
$ 162.71 $ 161.31
Connectivity (e)
Residential 28,446 28,758
Small Business 2,074 2,080
Total Connectivity Customers 30,520 30,838
Internet
Residential 27,524 27,979
Small Business 2,036 2,045
Total Internet Customers 29,560 30,024
Mobile Lines (f)
Residential 11,714 10,031
Small Business 420 334
Total Mobile Lines 12,134 10,365
Video (g)
Residential 12,021 12,160
Small Business 524 551
Total Video Customers 12,545 12,711
Voice
Residential 4,665 5,372
Small Business 1,207 1,234
Total Voice Customers 5,872 6,606
Mid-Market & Large Business Primary Service Units ("PSUs") (h)
360 344
(a)We calculate the aging of customer accounts based on the monthly billing cycle for each account in accordance with our collection policies. On that basis, as of March 31, 2026 and 2025, customers include approximately 87,600 and 92,200 customers, respectively, whose accounts were over 60 days past due, approximately 7,800 and 10,700 customers, respectively, whose accounts were over 90 days past due and approximately 13,600 and 17,000 customers, respectively, whose accounts were over 120 days past due.
(b)Customer relationships include the number of customers that receive one or more levels of service, encompassing Internet, mobile, video and voice services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units ("MDUs") and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude mid-market & large business customer relationships.
(c)Monthly residential revenue per residential customer is calculated as total residential quarterly revenue divided by three divided by average residential customer relationships during the respective quarter.
(d)Monthly small business revenue per small business customer is calculated as total small business quarterly revenue divided by three divided by average small business customer relationships during the respective quarter.
(e)Connectivity customers represent all customers receiving our Internet and/or mobile connectivity services.
(f)Mobile lines include phones and tablets which require one of our standard rate plans (e.g., "Unlimited" or "By the Gig"). Mobile lines exclude wearables and other devices that do not require standard phone rate plans.
(g)Video customers only include customers that purchase Spectrum traditional or streaming linear video packages and exclude customers that only purchase streaming applications.
(h)Mid-market & large business PSUs represent the aggregate number of fiber service offerings counting each separate service offering at each customer location as an individual PSU.
Critical Accounting Policies and Estimates
For a discussion of our critical accounting policies and the means by which we develop estimates, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K. There have been no material changes from the critical accounting policies described in our Form 10-K.
Results of Operations
The following table sets forth the consolidated statements of operations for the periods presented (dollars in millions):
Three Months Ended March 31,
2026 2025
Revenues $ 13,597 $ 13,735
Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below)
8,182 8,219
Depreciation and amortization 2,204 2,173
Other operating expenses, net 15 123
10,401 10,515
Income from operations 3,196 3,220
Other Income (Expenses):
Interest expense, net (1,245) (1,231)
Other expenses, net (130) (142)
(1,375) (1,373)
Income before income taxes 1,821 1,847
Income tax expense (14) (9)
Consolidated net income 1,807 1,838
Less: Net income attributable to noncontrolling interests (1) (1)
Net income attributable to CCO Holdings member $ 1,806 $ 1,837
Revenues. Total revenues decreased $138 million during the three months ended March 31, 2026 compared to the corresponding period in 2025. The decrease was primarily due to higher seamless entertainment allocation, partly offset by growth in connectivity revenue.
Revenues by service offering were as follows (dollars in millions; all percentages are calculated using whole numbers; minor differences may exist due to rounding):
Three Months Ended March 31,
2026 2025 % Change
Internet $ 5,852 $ 5,930 (1.3) %
Mobile service 1,052 914 15.1 %
Connectivity 6,904 6,844 0.9 %
Video 3,252 3,580 (9.2) %
Voice 338 356 (5.0) %
Residential revenue 10,494 10,780 (2.7) %
Small business 1,090 1,088 0.2 %
Mid-market & large business 749 734 2.1 %
Commercial revenue 1,839 1,822 1.0 %
Advertising sales 358 340 5.3 %
Other 906 793 14.2 %
$ 13,597 $ 13,735 (1.0) %
The decrease in Internet revenues from our residential customers is attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Decrease in average residential Internet customers $ (87)
Increase related to rate and product mix changes 9
$ (78)
Residential Internet customers decreased by 455,000 customers from March 31, 2025 to March 31, 2026. The increase related to rate and product mix was primarily due to promotional rate step-ups, rate adjustments, and a favorable change in bundled revenue allocation.
The increase in mobile service revenues from our residential customers is attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Increase in average residential mobile lines $ 164
Decrease related to rate (26)
$ 138
Residential mobile lines increased by approximately 1.7 million mobile lines from March 31, 2025 to March 31, 2026. The decrease related to rate was primarily due to less favorable bundled revenue allocation, partly offset by rate adjustments.
Video revenues consist primarily of revenues from video services provided to our residential customers, as well as franchise fees, equipment service fees and video installation revenue. The decrease in video revenues is attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Increase in seamless entertainment allocation $ (171)
Decrease related to rate and product mix changes (103)
Decrease in average residential video customers (54)
$ (328)
Seamless entertainment allocation represents costs allocated to programmer streaming applications and netted within video revenue. The increase in seamless entertainment allocation is due to growth in seamless entertainment applications and higher activations. The decrease related to rate and product mix was primarily due to a higher mix of lower priced video packages within our video customer base and more unfavorable bundled revenue allocation, partly offset by promotional rate step-ups and video rate adjustments that pass-through programming rate increases. Residential video customers decreased by 139,000 from March 31, 2025 to March 31, 2026.
The decrease in voice revenues from our residential customers is attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Decrease in average residential voice customers $ (49)
Increase related to rate adjustments 31
$ (18)
Residential wireline voice customers decreased by 707,000 customers from March 31, 2025 to March 31, 2026.
The increase in small business revenues is attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Increase related to rate and product mix changes $ 9
Decrease in average small business customers (7)
$ 2
Small business customers decreased by 15,000 from March 31, 2025 to March 31, 2026.
Mid-market & large business revenues increased $15 million during the three months ended March 31, 2026 compared to the corresponding period in 2025 primarily due to an increase in Internet PSUs. Mid-market & large business PSUs increased 16,000 from March 31, 2025 to March 31, 2026.
Advertising sales revenues consist primarily of revenues from commercial advertising customers, programmers and other vendors, as well as local cable and advertising on regional sports and news channels. Advertising sales revenues increased $18 million during the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to an increase in political and streaming advertising revenue, partly offset by a decrease in linear advertising revenue.
Other revenues consist of revenue from mobile and video device sales, processing fees, regional sports and news channels (excluding intercompany charges or advertising sales on those channels), subsidy revenue, home shopping, wire maintenance fees and other miscellaneous revenues. Other revenues increased $113 million during the three months ended March 31, 2026 compared to the corresponding period in 2025 primarily due to higher mobile device sales.
Operating costs and expenses. The decrease in our operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, are attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Programming $ (214)
Other costs of revenue 181
Field and technology operations (24)
Customer operations (6)
Marketing and residential sales (30)
Transition expenses 24
Other 32
$ (37)
Programming costs were approximately $2.1 billion and $2.3 billion for the three months ended March 31, 2026 and 2025, representing 26% and 28% of total operating costs and expenses, respectively. Programming costs consist primarily of costs paid to programmers for basic, premium, video on demand, and pay-per-view programming. Programming costs decreased as a result of a $171 million increase in costs allocated to seamless entertainment applications and netted within video revenue as well as a higher mix of lower cost video packages within our video customer base and fewer video customers, partly offset by contractual rate adjustments, including renewals and increases in amounts paid for retransmission consent.
Other costs of revenue increased $181 million during the three months ended March 31, 2026 compared to the corresponding period in 2025 primarily due to higher mobile service direct costs and mobile device sales due to an increase in mobile lines as well as higher advertising sales costs given higher political revenue.
Depreciation and amortization. Depreciation and amortization expense increased $31 million during the three months ended March 31, 2026 compared to the corresponding period in 2025 primarily due to an increase in depreciation as a result of more recent capital expenditures, partly offset by certain assets becoming fully depreciated.
Other operating expenses, net. The decrease in other operating expenses, net is attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Special charges, net $ (34)
Merger and acquisition costs 15
Loss on disposal of assets, net (89)
$ (108)
See Note 8 to the accompanying consolidated financial statements contained in "Item 1. Financial Statements" for more information.
Interest expense, net. Net interest expense increased by $14 million for the three months ended March 31, 2026 compared to the corresponding period in 2025 primarily due to an increase in weighted average debt.
Other expenses, net. The change in other expenses, net is attributable to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Loss on equity investments, net $ (4)
Loss on financial instruments, net (see Note 6) 20
Loss on extinguishment of debt (see Note 4) (4)
$ 12
See Note 8 and the Notes referenced above to the accompanying consolidated financial statements contained in "Item 1. Financial Statements" for more information.
Income tax expense. We recognized income tax expense of $14 million and $9 million for the three months ended March 31, 2026 and 2025, respectively.
Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest relates to our third-party interest in CV of Viera, LLP, a consolidated joint venture in a small cable system in Florida.
Net income attributable to CCO Holdings member. Net income attributable to CCO Holdings member decreased $31 million during the three months ended March 31, 2026 compared to the corresponding period in 2025 primarily as a result of the factors described above.
Use of Adjusted EBITDA and Free Cash Flow
We use certain measures that are not defined by U.S. generally accepted accounting principles ("GAAP") to evaluate various aspects of our business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income attributable to CCO Holdings member and net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by us, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and free cash flow are reconciled to net income attributable to CCO Holdings member and net cash flows from operating activities, respectively, below.
Adjusted EBITDA eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our businesses as well as other non-cash or special items, and is unaffected by our capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of financing. These costs are evaluated through other financial measures.
Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.
Management and Charter's board of directors use Adjusted EBITDA and free cash flow to assess our performance and our ability to service our debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under our credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the Securities and Exchange Commission (the "SEC")). For the purpose of calculating compliance with leverage covenants, we use Adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees which were $366 million for both the three months ended March 31, 2026 and 2025.
A reconciliation of Adjusted EBITDA and free cash flow to net income attributable to CCO Holdings member and net cash flows from operating activities, respectively, is as follows (dollars in millions):
Three Months Ended March 31,
2026 2025
Net income attributable to CCO Holdings member $ 1,806 $ 1,837
Plus: Net income attributable to noncontrolling interest 1 1
Interest expense, net 1,245 1,231
Income tax expense 14 9
Depreciation and amortization 2,204 2,173
Stock compensation expense 203 222
Other, net 145 265
Adjusted EBITDA $ 5,618 $ 5,738
Net cash flows from operating activities $ 4,351 $ 4,291
Less: Purchases of property, plant and equipment (2,855) (2,399)
Change in accrued expenses related to capital expenditures (77) (273)
Free cash flow $ 1,419 $ 1,619
Liquidity and Capital Resources
Overview
We have significant amounts of debt and require significant cash to fund principal and interest payments on our debt. The principal amount of our debt as of March 31, 2026 was $94.3 billion, consisting of $11.7 billion of credit facility debt, $55.4 billion of investment grade senior secured notes and $27.3 billion of high-yield senior unsecured notes. Our split credit rating allows us to access both the investment grade debt and the high yield debt markets.
Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditures. Free cash flow was $1.4 billion and $1.6 billion for the three months ended March 31, 2026 and 2025, respectively. See the table below for factors impacting free cash flow during the three months ended March 31, 2026 compared to the corresponding prior period. As of March 31, 2026, the amount available under our credit facilities was approximately $4.6 billion and cash on hand was approximately $246 million. We expect to utilize free cash flow, cash on hand and availability under our credit facilities as well as future refinancing transactions to further extend the maturities of our obligations. The timing and terms of any refinancing transactions will be subject to market conditions among other considerations. Additionally, we may, from time to time, and depending on market conditions and other factors, use cash on hand and the proceeds from securities offerings or other borrowings to retire our debt through open market purchases, privately negotiated purchases, tender offers or redemption provisions. We are also required to fund approximately $4.2 billion of cash purchase price at the closing of the Cox Transactions. We believe we have sufficient liquidity from cash on hand, free cash flow and Charter Communications Operating, LLC's ("Charter Operating") revolving credit facility as well as access to the capital markets to fund our projected cash needs.
We continue to evaluate the deployment of our cash on hand and anticipated future free cash flow, including investing in our business growth and other strategic opportunities, including expanding the capacity of our network, the expansion of our network through our rural broadband construction initiative, the build-out and deployment of our CBRS spectrum, and mergers and acquisitions as well as distributions to parent companies for stock repurchases and dividends. Charter's leverage ratio of net debt to the last twelve months Adjusted EBITDA was 4.15 times as of March 31, 2026. Charter plans to maintain a leverage ratio, pro forma for the closing of the Liberty Broadband Corporation ("Liberty Broadband") Combination near the midpoint of its stated range of 4.0 to 4.5 times Adjusted EBITDA in the period leading up to the Closing, and up to 3.5 times Adjusted EBITDA at the Charter Operating first lien level. Charter plans to adjust its long-term target leverage range after the Closing to 3.5 to 3.75 times Adjusted EBITDA. As Adjusted EBITDA grows, we expect to increase the total amount of our indebtedness to maintain leverage within Charter's target leverage range.
Excluding purchases from Liberty Broadband discussed below, during the three months ended March 31, 2026 and 2025, Charter purchased in the public market approximately 3.4 million and 1.2 million shares of Charter Class A common stock, respectively, for approximately $773 million and $431 million, respectively. Since the beginning of its buyback program in
September 2016 through March 31, 2026, Charter has purchased approximately 184.0 million shares of Class A common stock and Charter Holdings common units for approximately $79.7 billion, including purchases from Liberty Broadband and Advance/Newhouse Partnership ("A/N") discussed below.
On November 12, 2024, Charter, Liberty Broadband, Fusion Merger Sub 1, LLC, a wholly owned subsidiary of Charter, and Fusion Merger Sub 2, Inc., a wholly owned subsidiary of Fusion Merger Sub 1, LLC, entered into an Agreement and Plan of Merger (as it may be amended or supplemented from time to time, the "Merger Agreement"), pursuant to which, subject to the terms and conditions set forth therein, Charter will acquire Liberty Broadband through the merger of Fusion Merger Sub 2, Inc. with and into Liberty Broadband (the "Merger"), with Liberty Broadband surviving the Merger and becoming an indirect wholly owned subsidiary of Charter. Immediately following the Merger, Liberty Broadband, as the surviving corporation of the Merger, will merge with and into Fusion Merger Sub 1, LLC (the "Upstream Merger" and together with the Merger, the "Liberty Broadband Combination"), with Fusion Merger Sub 1, LLC surviving the Upstream Merger as a wholly owned subsidiary of Charter.
On November 12, 2024, Charter and Liberty Broadband also entered into Amendment No. 1 to the Second Amended and Restated Stockholders Agreement and the Letter Agreement (the "Stockholders and Letter Agreement Amendment"). The Stockholders and Letter Agreement Amendment sets forth, among other things, the terms of Liberty Broadband's participation in Charter's share repurchases during the period between the execution of the Merger Agreement and the effective time of the Merger. Pursuant to the Stockholders and Letter Agreement Amendment, each month during the pendency of the proposed transaction, Charter will repurchase shares of Charter Class A common stock from Liberty Broadband in an amount equal to the greater of (i) $100 million and (ii) the Liberty Broadband minimum liquidity threshold as set forth in the Stockholders and Letter Agreement Amendment, provided that if any repurchase would reduce Liberty Broadband's equity interest in Charter below 25.25% after giving effect to such repurchase or if all or a portion of such repurchase is not permitted under applicable law, then Charter shall instead loan to Liberty Broadband an amount equal to the lesser of (x) the repurchase amount that cannot be repurchased and (y) the Liberty Broadband minimum liquidity threshold as set forth in the Stockholders and Letter Agreement Amendment less the repurchase amount that is repurchased, with such loan on the terms set forth in the Stockholders and Letter Agreement Amendment. From and after the date Liberty Broadband's exchangeable debentures are no longer outstanding, the amount of monthly repurchases will be the lesser of (i) $100 million and (ii) an amount equal to the sum of (x) the amount needed, in the reasonable judgment of Charter, to maintain an unrestricted cash balance of Liberty Broadband and its subsidiaries (other than GCI Holdings, LLC, GCI Spinco (as defined in the Merger Agreement) and their respective subsidiaries) of $50 million plus (y) the aggregate outstanding principal amount of the Liberty Broadband margin loan. The purchase price payable by Charter to Liberty Broadband in connection with such monthly repurchases will equal (i) the average price paid by Charter for shares of Charter Class A common stock repurchased during the immediately preceding calendar month (excluding shares repurchased from A/N and certain other excluded repurchases) or (ii) if Charter has not engaged in any repurchases of shares of Charter Class A common stock during the immediately preceding calendar month (other than any repurchases from A/N and certain other excluded repurchases), a purchase price based on a Bloomberg volume-weighted average price methodology proposed by Charter and reasonably acceptable to Liberty Broadband. Liberty Broadband will apply the proceeds from any such repurchases or borrowings from Charter to repay certain of its outstanding indebtedness in accordance with the Stockholders and Letter Agreement Amendment. The Stockholders and Letter Agreement Amendment provides that Liberty Broadband will be exempt from the standstill restrictions and the ownership cap under the Second Amended and Restated Stockholders Agreement among Charter, Liberty Broadband and A/N, dated as of May 23, 2015 to the extent its ownership in Charter exceeds such ownership cap solely as a result of the repurchase provisions in the Stockholders and Letter Agreement Amendment. During the three months ended March 31, 2026 and 2025, Charter purchased from Liberty Broadband 0.9 million and 0.8 million shares of Charter Class A common stock, respectively, for approximately $190 million and $300 million, respectively.
In December 2016, Charter and A/N entered into a letter agreement, as amended in December 2017 (the "Existing A/N Letter Agreement"), that requires A/N to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter Holdings common units that represents a pro rata participation by A/N and its affiliates in any repurchases of shares of Charter Class A common stock from persons other than A/N effected by Charter during the immediately preceding calendar month, at a purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N during such immediately preceding calendar month. In connection with the Cox Transactions, Charter, Charter Holdings and A/N entered into an amendment to the Existing A/N Repurchase Letter, dated as of May 16, 2025 (the "A/N Repurchase Letter Amendment") which sets forth, among other things, the updated terms of A/N's participation in Charter's share repurchases going forward. The right to participate pro rata in repurchases on the terms and conditions set forth in the A/N Repurchase Letter Amendment is effective only from the earlier of the Closing and, in the event the Transaction Agreement is terminated in accordance with its terms, the date of such termination (such earlier date, the "Trigger Date"). Prior to the Trigger Date, the Existing A/N Letter Agreement will remain in full force and continue to govern A/N's
participation in Charter's share repurchases, except for certain specific amendments set forth in the A/N Repurchase Letter Amendment which became effective upon execution of the A/N Repurchase Letter Amendment, including, in certain circumstances, where A/N elects not to participate in redemptions by Charter Holdings because such participation would cause A/N's equity interest in Charter to be less than 11% prior to the Trigger Date, A/N may, subject to certain conditions, elect to receive a tax loan from Charter Holdings on the terms set forth in the A/N Repurchase Letter Amendment and in definitive documents in form and substance reasonably satisfactory to Charter and A/N. During the three months ended March 31, 2025, Charter Holdings purchased from A/N 0.1 million Charter Holdings common units for approximately $20 million. Charter Holdings' did not purchase any Charter Holdings common units from A/N during the three months ended March 31, 2026.
On August 4, 2025, Charter received a notice from A/N pursuant to the Existing Letter Agreement, whereby A/N notified Charter that A/N was suspending the standing share repurchase agreement between A/N and Charter (the "Suspension"). The Suspension took effect immediately after the first repurchase closing date under the Existing Letter Agreement to occur following the date of the notice. In the notice, A/N informed Charter that it intends for the Suspension to continue through the consummation of the closing of the Cox Transactions or the termination thereof, but reserved the right to end such Suspension before or after such time.
As of March 31, 2026, Charter had remaining board authority to purchase an additional $179 million of Charter's Class A common stock and/or Charter Holdings common units, excluding purchases from Liberty Broadband. Although Charter expects to continue to buy back its common stock consistent with its leverage target range, Charter is not obligated to acquire any particular amount of common stock, and the timing of any purchases that may occur cannot be predicted and will largely depend on market conditions and other potential uses of capital. Purchases may include open market purchases, tender offers or negotiated transactions. To the extent such purchases occur, CCO Holdings and its subsidiaries are the primary source for funding such purchases through distributions to their parent companies.
As possible acquisitions, swaps or dispositions arise, we actively review them against our objectives including, among other considerations, improving the operational efficiency, geographic clustering of assets, product development or technology capabilities of our business and achieving appropriate return targets, and we may participate to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions, including the Cox Transactions or Liberty Broadband Combination, dispositions or system swaps, or that any such transactions will be material to our operations or results.
Free Cash Flow
Free cash flow decreased $200 million during the three months ended March 31, 2026 compared to the corresponding prior period in 2025 due to the following (dollars in millions):
Three months ended
March 31, 2026
compared to
three months ended
March 31, 2025
Increase in capital expenditures $ (456)
Decrease in Adjusted EBITDA (120)
Increase in cash paid for interest, net (67)
Changes in working capital, excluding mobile devices 381
Changes in working capital, mobile devices 51
Other, net 11
$ (200)
Financial Information about Guarantors, Issuers of Guaranteed Securities, Affiliates Whose Securities Collateralize a Registrant's Securities and Consolidated Subsidiaries
Each of CCO Holdings, Charter Operating, Time Warner Cable, LLC and Time Warner Cable Enterprises LLC (collectively, the "Issuers") and substantially all of Charter Operating's direct and indirect subsidiaries (the "Obligor Subsidiaries" and together with the Issuers, collectively, the "Obligor Group" and each an "Obligor") jointly, severally, fully and unconditionally guarantee the outstanding debt securities of the respective Issuers (other than the CCO Holdings unsecured notes) and Charter Operating's credit facilities on a senior basis (collectively, the "Guaranteed and Secured Debt"). Such guarantees are pari passu
in right of payment with all senior indebtedness of the guarantors and senior in right of payment to subordinated obligations of the guarantors. Each guarantee will be limited to the maximum amount that can be guaranteed by the relevant guarantor without rendering the relevant guarantee, as it relates to that guarantor, voidable or otherwise ineffective or limited under applicable law, and enforcement of each guarantee would be subject to certain generally available defenses. The Guaranteed and Secured Debt is structurally subordinated to the creditors (including trade creditors) and preference shareholders (if any) of Charter Operating's non-guarantor subsidiaries.
The Guaranteed and Secured Debt and the subsidiary guarantees thereof are also secured by (i) a lien on substantially all of the assets of Charter Operating and the Obligor Subsidiaries, to the extent such lien can be perfected under the Uniform Commercial Code by the filing of a financing statement, and (ii) a pledge of substantially all of the equity interests of subsidiaries owned by Charter Operating or the Obligor Subsidiaries (the "Pledged Equity Interests"), as well as intercompany obligations owing to it by any of such entities ((i) and (ii) collectively, the "Collateral"). In addition, payments of a mortgage note, currently outstanding for approximately $261 million, incurred by a single-asset special purpose entity to finance construction of the first building of the Charter headquarters in Stamford, Connecticut are guaranteed by the Obligor Group and rank equally with the liens on the Collateral securing the Guaranteed and Secured Debt. No assets of any of Charter Operating's non-guarantor subsidiaries (including any capital stock owned by any such subsidiary) will constitute Collateral. The subsidiary guarantees are effectively senior to all unsecured debt or debt secured by junior liens of the subsidiary guarantors, in each case to the extent of the value of the collateral securing the guarantee obligations of the subsidiary guarantors. Upon the occurrence and during the continuance of an event of default under the Guaranteed and Secured Debt, subject to the terms of an intercreditor agreement, the security documents governing the Guaranteed and Secured Debt provide for (among other available remedies) the foreclosure upon and sale of the Collateral by the collateral agent(s) of the respective Guaranteed and Secured Debt and the distribution of the net proceeds of any such sale to the holders and/or the lenders of the Guaranteed and Secured Debt on a pro rata basis, subject to any prior liens on the Collateral. We believe there is no separate trading market for the Pledged Equity Interests.
We presently expect that after the Closing: (i) the outstanding unsecured notes issued by Cox Communications that will be assumed at the Closing will constitute Guaranteed and Secured Debt and (ii) Cox Communications and, subject to certain exceptions, substantially all of its subsidiaries will become Obligors. Additionally, all or a portion of the approximately $4.2 billion of indebtedness issued to finance the cash payment under the Cox Transactions may constitute Guaranteed and Secured Debt when issued.
Certain Charter Operating subsidiaries that are regulated entities are only designated as guarantor subsidiaries, and certain related assets (including the capital stock of such regulated entities) are only required to be pledged as Collateral, upon approval by regulators. The guaranteed obligations and collateral of an Obligor Subsidiary (including Pledged Equity Interests) may be released under certain circumstances permitted under the documentation governing the Guaranteed and Secured Debt, including if an Obligor Subsidiary no longer qualifies as a "Subsidiary" of Charter Operating under transactions not prohibited by the Charter Operating credit agreement.
Our bankruptcy remote special purpose vehicle and consolidated subsidiary, CCO EIP Financing, LLC, (the "SPV Borrower") is the borrower of a senior secured revolving credit facility to finance the purchase of equipment installment plan receivables ("EIP Receivables") with a number of financial institutions (the "EIP Financing Facility"). Borrowings under the EIP Financing Facility are secured by the EIP Receivables transferred to the SPV Borrower, future collections on such EIP Receivables, and related assets consisting primarily of restricted cash. We and our other subsidiaries do not guarantee any principal or interest payable by SPV Borrower under the EIP Financing Facility and SPV Borrower is not a guarantor of the Guaranteed and Secured Debt. As of March 31, 2026, the carrying value of the EIP Financing Facility was $1.6 billion and is reflected on our consolidated balance sheets. As of March 31, 2026, pledged EIP Receivables with an unpaid principal balance of $2.2 billion, included in accounts receivable, net and other noncurrent assets, and restricted cash of $105 million, included in prepaid expenses and other current assets, are held by the SPV Borrower and reflected on our consolidated balance sheets.
See Note 9 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2025 for further details about the terms, conditions and other factors that may affect payments to holders and the collateral arrangements of the Guaranteed and Secured Debt.
Because the assets, liabilities and results of operations of the combined Obligor Group are not materially different than corresponding amounts presented in the consolidated financial statements of CCO Holdings, summarized financial information of the Obligor Group have been omitted pursuant to SEC Regulation S-X Rule 13-01, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered and S-X Rule 13-02, Affiliates Whose Securities Collateralize Securities Registered Or Being Registered.
Limitations on Distributions
Distributions by us and our subsidiaries to a parent company for payment of principal on parent company notes are restricted under CCO Holdings indentures governing CCO Holdings' indebtedness, unless there is no default under the applicable indenture, and unless CCO Holdings' leverage ratio test is met at the time of such distribution. As of March 31, 2026, there was no default under any of these indentures, and CCO Holdings met its leverage ratio test based on March 31, 2026 financial results. There can be no assurance that CCO Holdings will satisfy its leverage ratio test at the time of the contemplated distribution.
In addition to the limitation on distributions under the various indentures, distributions by our subsidiaries may be limited by applicable law, including the Delaware Limited Liability Company Act, under which our subsidiaries may only make distributions if they have "surplus" as defined in the act.
Historical Operating, Investing, and Financing Activities
Cash and Cash Equivalents. We held $246 million and $218 million in cash and cash equivalents as of March 31, 2026 and December 31, 2025, respectively. In addition, we held $105 million and $121 million in restricted cash included in prepaid and other current assets in our consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively.
Operating Activities. Net cash provided by operating activities increased $60 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to favorable changes in working capital.
Investing Activities. Net cash used in investing activities was $3.0 billion and $2.8 billion for the three months ended March 31, 2026 and 2025, respectively. The increase in cash used was primarily due to an increase in capital expenditures, partly offset by a favorable change in accrued expenses related to capital expenditures.
Financing Activities. Net cash used in financing activities increased $226 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to an increase in distributions to parent companies.
Capital Expenditures
We have significant ongoing capital expenditure requirements. Capital expenditures were $2.9 billion and $2.4 billion for the three months ended March 31, 2026 and 2025, respectively. The increase was primarily driven by higher spend on network evolution and an increase in customer premise equipment. See the table below for more details.
We currently expect full year 2026 capital expenditures, excluding impacts from the Cox Transactions, to total approximately $11.4 billion. The actual amount of capital expenditures in 2026 will depend on a number of factors including, but not limited to, the pace of our network evolution and expansion initiatives, supply chain timing and residential and business growth rates.
Our capital expenditures are funded primarily from cash flows from operating activities and borrowings on our credit facility. In addition, our accrued expenses related to capital expenditures decreased by $77 million and $273 million for the three months ended March 31, 2026 and 2025, respectively.
The following tables present our major capital expenditures categories in accordance with National Cable and Telecommunications Association ("NCTA") disclosure guidelines for the three months ended March 31, 2026 and 2025. These disclosure guidelines are not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):
Three Months Ended March 31,
2026 2025
Customer premise equipment (a)
$ 668 $ 473
Scalable infrastructure (b)
310 293
Upgrade/rebuild (c)
675 395
Support capital (d)
390 360
Capital expenditures, excluding line extensions 2,043 1,521
Subsidized rural construction line extensions 426 467
Other line extensions 386 411
Total line extensions (e)
812 878
Total capital expenditures $ 2,855 $ 2,399
Of which:
Commercial services $ 286 $ 273
Subsidized rural construction initiative (f)
$ 427 $ 468
Mobile $ 60 $ 53
(a)Customer premise equipment includes equipment and devices located at the customer's premise used to deliver our Internet, video and voice services (e.g., modems, routers and set-top boxes), as well as installation costs.
(b)Scalable infrastructure includes costs, not related to customer premise equipment or our network, to secure growth of new customers or provide service enhancements (e.g., headend equipment).
(c)Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including our network evolution initiative.
(d)Support capital includes costs associated with the replacement or enhancement of non-network assets (e.g., back-office systems, non-network equipment, land and buildings, vehicles, tools and test equipment).
(e)Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
(f)The subsidized rural construction initiative subcategory includes projects for which we are receiving subsidies from federal, state and local governments, excluding customer premise equipment and installation.
Recently Issued Accounting Standards
See Note 19 to the Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of recently issued accounting standards. There have been no material changes from the recently issued accounting standards described in our Form 10-K.
CCO Holdings LLC published this content on April 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 24, 2026 at 11:07 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]