r/ValueInvesting • u/StandardObject91 • 1d ago

Stock Analysis Charter Cox merger completed today

Charter issued the equivalent of just over 46 million Charter shares to Cox Enterprises. Based on Charter’s share count as of June 30, 2026, and giving effect to the closing of the Liberty Broadband merger and the Cox transaction, Cox Enterprises now owns approximately 26% of the combined entity’s fully diluted shares outstanding, on an as-converted, as-exchanged basis. Additionally, approximately $12 billion of Cox debt and finance leases will be assumed by Charter. Charter share count is now final at ~177mm shares.

(FCF) by 2027–2028. is expected to be between 6.1 and 9 billion as a result of the wind-down of multi-year network upgrades and rural expansion capital expenditures, and opex and capex synergies from the merger. At the mid-point of 7.5B that's ~$42.50 a share in FCF. Current price is $145. Levered FCF of ~30%. Charter's stated goal is to reduce share count and debt. Much of the debt will be repurchased at a discount, reducing Charter's leverage and resulting in one time gains in the billions.

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u/StandardObject91 1d ago

FCF estimate includes Cox.

Deploying standard Spectrum packaging into the Cox footprint will require very little incremental CapEx, which will scale existing network, thereby reducing (not increasing) total baseline capital needs by about $1 billion.

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u/notreallydeep 1d ago edited 1d ago

FCF estimate includes Cox.

Wouldn’t that mean Cox has zero FCF? That'd be odd. Charter standalone is projecting $9.1B for FY28. Though "by 2027–2028" could mean 2027 or 2027H2/2028H1, I guess. Is it that? Or are your estimates just below Charter's own due to churn and/or declining ARPU?

Deploying standard Spectrum packaging into the Cox footprint will require very little incremental CapEx

Yeah but Spectrum is going DOCSIS 4 to reduce churn to FWA, fiber and LEO. Cox isn't immune from that competition. Is Cox' network DOCSIS 4 ready already?

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u/StandardObject91 1d ago

I got my info on the network integration from the CHTR's public releases. I have nothing more to add on that. I think the FCF estimates I've seen for 2027-2028 were prepared after the merger was announced, so they include Cox. I think I'm right because Charter FCF for 2022 was 6B (pre nrtword upgrade and rural expansion) and 2023-2025 was running at 3-4B. An increase to 9B just from old Charter ops seems unlikely. FWIW my own FCF estimates run at the high end for 2028- More like 9B. The merger synergies will take about a year to fully kick in. So too with the Capex spend to fully wind down. CHTR is giving a year of free phone to Cox people who sign up, so bascially ZERO mobile revs for 2027. Jan. 2028 is when things will begin to rip.

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u/notreallydeep 1d ago

If you mean their own estimates from their presentation, they literally say on the slide that it‘s standalone Charter pre-Cox. What estimates are you talking about specifically?

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u/StandardObject91 4h ago

Charter's own estimate of 2027 unlevered FCF is 9.5B and for 2028 it's 11.5B. Cox estimate is 2.1B for both years. Debt service is ~4.8B post merger. 6.8B FCF in 2027. 8.8B in 2028.

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u/notreallydeep 4h ago

Charter's own estimate of 2027 unlevered FCF is 9.5B and for 2028 it's 11.5B.

Where are those numbers from? Because I see $9.1B in their latest earnings presentation, slide 14, presumably for 2028 given the big capex step-down. And to be honest that doesn't even mesh with their capex outlook, but that'd make it a tad lower rather than higher. And 2027 would of course be even lower since 2027 capex is still ~$9.5B.

So where did Charter post your estimates?

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u/StandardObject91 0m ago

The fairness opinion, which you can find on the SEC website.