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Charter Revenue Keeps Rising But Debt Keeps Growing

Charter Communications Inc. saw revenue rise 8.9 percent in the second quarter (compared to Q2 2007) to $1.6 billion, primarily driven by increases in telephone and high-speed Internet (HSI) revenues. Total ARPU (revenue per customer) among the company’s 5.56 million customers grew 12.2 percent year-over-year to $104.35, driven by increased sales of “The Charter Bundle,” advanced services growth and upgrading customers to higher service tiers.

Video revenues were $874 million, up 2.5 percent year-over-year, primarily as a result of advanced services revenue growth partially offset by a decline in basic video customers.

But the company still posted a net loss for the second quarter of $276 million (74 cents per share), a slight improvement from the $360 million net loss (98 cents per share) in last year’s second quarter.

The loss only adds to Charter’s massive debtload, which threatens to lead it to bankruptcy or major asset sales if it runs out of places to borrow. As of June 30, 2008, Charter had nearly $20.5 billion in long-term debt and $63 million in cash on hand.

The company—which paid $912 million in debt in the first half of 2008, according to an SEC filing—said its cash flow and current credit lines could leave Charter unable to pay its bills in 2010—specifically $1.9 billion worth of notes due in September 2010.

Capital expenses are also up so far this year, to $650 million in the first six months of 2008 compared to $579 million in January-June 2007, primarily because of the increased purchase of advanced set top boxes.

“A continuation of the recent turmoil in the credit markets and the general economic downturn could adversely impact the terms and/or pricing when the company needs to raise additional liquidity,” Charter told the SEC. “No assurances can be given that the Company will not experience liquidity problems if it does not obtain sufficient additional financing on a timely basis as the company’s debt becomes due or because of adverse market conditions, increased competition, or other unfavorable events.”