New Charter is going to have to raise rates to handle debt, policy wonk says
If its bids to acquire Time Warner Cable (NYSE: TWC) and Bright House Networks prove successful, Charter Communications (NASDAQ: CHTR) will emerge from these deals with about $66 billion in combined debt.
And the only way the operator will be able to pay off this debt will be to raise rates, says Dana Floberg, C. Edwin Baker policy fellow at Free Press, blogging on The Hill.
"The new company plans to take on an additional debt burden of $1,142 per customer, and Charter has every incentive to make that money back by raising your rates," Floberg said. "With U.S. broadband prices already significantly higher than those in most developed countries, this is a significant burden."
Charter reps didn't immediately respond to FierceCable's inquiry for comment, but the company has recently touted its operational improvements over the last three years, and company executives said they believe the same efficiencies can be wrung out of TWC and Bright House.
You can read Floberg's complete post here.