Charter Communications is nearing the end of a large capital expenditure cycle, with CAPEX expected to drop from about $12 billion in 2026 to $8 billion, enabling free cash flow of $8-9 billion by 2027-2028. The company’s business model relies heavily on recurring subscription revenue, which makes up 89% of its income, and it carries significant leverage at 4.2 times EBITDA. This shift in spending is expected to unlock substantial free cash flow, providing opportunities for debt reduction, share buybacks, and dividends. Despite risks from competition and regulation, Charter trades at a discount, and normalized free cash flow could support a valuation above $500 per share at an 8-10 times free cash flow multiple.
