Charter lost 172,000 internet customers and revenue fell 1.7% to $13.5B in Q2 2026; diluted EPS rose 16.1% to $10.66 only because buybacks cut the share count 14% and a $243M bond-repurchase gain lifted profit.
Revenue
$13.5B
-1.7% YoY
Net income
$1.3B
-0.7% YoY
Diluted EPS
$10.66
+16.1% YoY
Operating margin
22.6%
Overview
Charter, which sells internet, TV, phone and mobile service under the Spectrum brand, lost 172,000 internet customers in the second quarter of 2026. That was a bigger loss than the 116,000 it lost a year earlier, and home internet is the product that pays most of its bills. Revenue fell 1.7% to $13.53 billion. Two things drove the drop: fewer broadband customers, and a new accounting practice in which part of each TV bill now covers the streaming apps Charter bundles in (Disney+, HBO Max, Peacock and others). That part is recorded as a cost that reduces video revenue, not as TV revenue. Mobile was the one clear area of growth: 406,000 lines added and mobile service revenue up 18.9%.
Net income attributable to Charter shareholders was nearly flat at $1.29 billion (-0.7%), and diluted earnings per share (EPS) rose 16.1% to $10.66. The EPS gain came almost entirely from buybacks: the diluted share count fell 14.4% in a year, to 121.3 million from 141.7 million. The underlying business earned less. Operating income fell 6.5%, and profit was propped up by a one-time $243 million gain from buying back Charter's own bonds for less than their face value.
Charter's deals for Cox Communications and Liberty Broadband both closed after the quarter ended, effective August 19, 2026 (per Charter's 8-K filed August 20, 2026). None of the figures below include Cox. The main effect in this quarter's numbers is $65 million of integration ("transition") costs.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$13,526M
$13,766M
-1.7%
Income from operations
$3,063M
$3,279M
-6.5%
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Operating margin is the share of revenue left after running the business, before interest and taxes. Adjusted EBITDA is Charter's preferred profit measure: operating profit before depreciation and amortization (the accounting write-down of past network spending), stock-based pay and one-off items. Free cash flow is the cash from operations left after capital spending.
First half of 2026: revenue $27,123M (-1.4%), net income attributable to Charter shareholders $2,455M (-2.5%), diluted EPS $19.81 (+12.6%), Adjusted EBITDA $11,086M (-3.2%), capital expenditures $5,726M (+8.6%), free cash flow $2,341M (-10.3%).
Customers: broadband losses deepened, mobile slowed, video improved
Quarterly net additions (thousands)
Q2 2026
Q2 2025
Internet
-172
-116
Mobile lines
+406
+491
Video
-21
-80
Wireline voice
-178
-220
Total customer relationships
-184
-100
Source: Charter Q2 2026 earnings release (8-K Exhibit 99.1, July 24, 2026).
Internet: Charter ended the quarter with 29.39 million internet customers, down 520,000 from a year earlier. Management's explanation in the 10-Q is short: "the competitive environment continued to challenge our Internet customer growth." The competitors the filing names include fiber-to-the-home providers and wireless broadband providers. Charter's network kept growing, with 58.98 million homes and businesses passed (+2.5%). Because the customer count fell, the share of those locations that are customers dropped to 53.4% from 55.7%.
Mobile: Total lines reached 12.54 million, up 15.5% year on year. Charter sells mobile as a bundle with Spectrum Internet, and its strategy is that the bundle gives customers a reason to stay. However, Q2 additions were 85,000 below the prior-year quarter, even with the $1,000 switching-savings guarantee launched in Q1.
Video: Losses shrank to 21,000 from 80,000. The earnings release credits simpler pricing and the inclusion of streaming apps in expanded basic TV packages. That improvement costs money, as the next section shows.
Rural buildout: Charter spent $391 million on its government-subsidized rural construction in the quarter and activated 127,000 subsidized rural passings (homes and businesses that can now order service). The release says customer relationships in that rural footprint grew by 47,000. That was the one part of the footprint where the customer count grew, while the company total fell by 184,000.
Revenue by service: the streaming-app allocation explains most of the video decline
Revenue line
Q2 2026
Q2 2025
YoY Change
Internet
$5,776M
$5,969M
-3.2%
Mobile service
$1,095M
$921M
+18.9%
Video
$3,149M
$3,488M
-9.7%
Voice
$331M
$346M
-4.5%
Residential total
$10,351M
$10,724M
-3.5%
Small business
$1,104M
$1,096M
+0.7%
Mid-market & large business
$761M
$740M
+2.8%
Advertising sales
$416M
$371M
+12.3%
Other
$894M
$835M
+7.1%
Video (-$339M): The 10-Q splits the decline into three parts. The largest, $184M, is a higher "seamless entertainment allocation". That is the cost of the programmers' streaming apps, which is subtracted from video revenue ($251M this quarter versus $67M a year earlier, per the release). Another $124M came from customers moving to cheaper TV packages and less favorable bundle pricing. Only $31M came from having fewer video customers. The allocation also cut programming costs by the same $184M, so it moves revenue and cost together and does little to profit. It makes the revenue decline look worse than the underlying business. Excluding the allocation and advertising, the release says total revenue fell only 0.8%, and revenue per residential customer was essentially flat (-0.1%) instead of -1.8%.
Internet (-$193M): The loss of customers accounts for $104M, and lower average pricing for $89M. Price is now working against Charter as well as customer count, which fits the lower promotional and bundled pricing strategy management describes.
Mobile (+$174M in residential): Additional lines contributed $147M and higher pricing $27M.
Advertising (+12.3%) came mainly from 2026 midterm political spending. Excluding political ads, advertising revenue fell 4.6% (per the release), because traditional TV ad sales are declining faster than streaming ad sales are growing.
Other revenue (+$59M) came mainly from higher mobile device sales, partly offset by a one-time $45M benefit in the prior-year quarter. Devices sell at thin margins, so this revenue adds little profit.
Profit: EPS was flattered by buybacks and a bond gain
Operating costs were essentially flat at $8,215M, versus $8,230M a year earlier. Within that, programming fell $218M, largely because of the streaming-app allocation. "Other costs of revenue" rose $186M because of mobile devices, the direct costs of carrying more mobile lines, and higher costs tied to political advertising. Transition expenses for the Cox integration added $65M, a new cost this year. Adjusted EBITDA fell 4.3% to $5,449M, and its margin fell to 40.3% from 41.4%. The release says Adjusted EBITDA fell 3.2% excluding transition expenses, so most of the decline is in the business itself, not merger costs.
The gap between flat net income and falling operating income comes from below the operating line. Other income swung to +$212M from -$107M, mainly because of the $243M gain on extinguishing debt. In an open-market program, Charter retired $1.2 billion of face value of its bonds for about $1.0 billion in cash, according to the release. Without that one-time gain, pre-tax income would have been roughly $1,756M, down about 8% from $1,909M. The effective tax rate also rose to 23.8% from 21.7%.
EPS rose 16.1% even though net income slipped, because the share count shrank sharply. That growth rate reflects the buybacks, not improvement in the business.
Cash flow, capital spending and leverage
Capital expenditures (spending on network and equipment) were flat at $2.87 billion, but the mix changed. Upgrade/rebuild spending, which includes the "network evolution" program to offer symmetrical and multi-gigabit speeds everywhere, rose 44% to $657M. Line extensions (building into new areas) fell 29% to $730M as rural construction slowed. Charter still expects about $11.4 billion of 2026 capex excluding Cox, and the release says network evolution should be finished in 2027.
Free cash flow was $969M, down $77M. Operating cash flow rose to $3,925M from $3,600M, helped by $554M less cash paid for taxes. That gain was offset by lower Adjusted EBITDA, unfavorable working-capital swings, and an unfavorable change in accrued capital spending.
Buybacks: Charter repurchased 4.0 million shares for $838M in the quarter. Of those, 1.9 million shares ($405M) were bought from Liberty Broadband under the pre-merger agreement. That works out to about $210 per share. In May it also lent Liberty Broadband about $359M. At June 30, only $365M of board-authorized buyback capacity remained, excluding Liberty purchases.
Debt: Total principal was $93.8 billion. Net debt (debt minus cash) was 4.18 times the last twelve months' Adjusted EBITDA, within Charter's 4.0–4.5x target range. Management plans to lower its long-term leverage target to 3.5x after the Cox closing and says it expects to reduce total debt to get there. At closing Charter must also pay about $4.2 billion in cash to Cox Enterprises and take on about $12.4 billion of Cox's net debt and finance leases.
Impairment watch: The 10-Q notes Charter's stock price fell during the quarter. If the lower price persists, management may need to test whether its franchise rights and goodwill (together about $97 billion on the balance sheet) are worth less than their book value. It says it does not view the decline as a fundamental change in the business.
Takeaway: The 16% EPS increase comes from a much smaller share count and a one-time bond gain. The business itself lost more broadband customers than a year ago, internet pricing fell, and Adjusted EBITDA dropped even before merger costs. Strong mobile growth has not made up for broadband losses.
Outlook
Management's only numeric guidance is roughly $11.4 billion of 2026 capex before Cox. From Q3 2026 on, reported results will include Cox Communications from August 19. That will make year-over-year comparisons harder to read, and it adds $6.0 billion of Cox-held preferred units paying a 6.875% dividend plus about 33.6 million new Charter Holdings common units held by Cox. The question to watch is organic: whether Charter's own internet losses stabilize as network evolution finishes in 2027 and more rural passings come online. Mobile growth could make each customer more valuable, but if broadband losses keep widening, that won't be enough to offset them. With buyback authority nearly used up and a lower 3.5x leverage target, share repurchases are likely to give EPS less help than in the past year.