Affordable Connectivity Program vote again delated by Senate, says Citi

Citi’s event-driven team points out that the Senate Commerce Committee postponed the planned vote today on the Spectrum and National Security Act to June 18, which includes an allocation of funding for the Affordable Connectivity Program. The firm still assigns a low probability of a revival of the now expired ACP in the near- to medium-term, but recognizes the ACP “may still have a chance to be revived by legislation.” Citi thinks June will be the first substantial month for potential churn and average revenue per user downgrades for fixed and mobile broadband customers previously on the ACP and expects an even greater negative impact on Q3 results if the program is not revived. The firm would not be surprised if today’s delay and ongoing risk that the ACP is not revived creates near-term trading pressure for cable stocks, specifically shares of Charter (CHTR) and Liberty Broadband (LBRDK).