Churn is good. Well, that requires a little further explanation: An environment in which customers are actively looking to change providers can be good--even very good--for opportunistic telecom companies.
That’s essentially how Tom Rutledge, chairman and CEO of Charter Communications put it in a webcast Thursday that was part of the Goldman Sachs Communacopia Conference. He acknowledged that churn has reached historically low levels for Charter, and that this fact, combined with the related savings in operational costs, means that Charter has done well weathering the last year and a half of the Covid-19 pandemic.
“The pandemic has created a very unusual operating environment for us,” Rutledge said. “Lower customer activity levels mean lower numbers of selling opportunities, but that also means lower cost structure.”
He added that it is hard to forecast how soon the market environment will become more active, but that a return to conditions characterized by “moving churn” will mean that Charter can leverage the full potential of its ability to sell new services to customers looking for change.
“We actually look forward to a higher churn environment,” he said. “We do well with prospects looking to change their services.”
Rutledge probably soon will get the chance to prove how much he likes churn as Charter looks to ramp up its efforts in wireless while facing growing competitive pressure from fiber over-builders in the broadband market.
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“If you look at the average mobile bill, it’s much higher than the average broadband bill,” Rutledge said. Though the costs to acquire those customers will start adding up, “we can bundle more services, save them more while giving them more and creating more revenue opportunity for our company.”
As customers start shopping again and competition in different service segments heats up, Charter also will be able to leverage the investment it has made in retail stores and other marketing efforts. “We spent capex on those stores, but that part of the selling machine is now in the market ready to use.”