Jessica Fischer
Chief Financial Officer at Charter Communications
Thanks, Chris. Let's turn to our customer results on Slide 5. Including residential and SMB, we added 63,000 Internet customers in the third quarter. We estimate that approximately 15,000 third quarter Internet disconnects were driven by the temporary loss of ESPN in September. Video customers declined by 327,000 in the third quarter, with about 100,000 video disconnects driven by the Disney programming dispute. The overall impact to customer relationships was less than we expected, facilitated in part by the wide availability of over-the-top alternative. The loss of Disney programming occurred both at the beginning of football season and in the midst of a programming cost pass-through and the launch of our new AutoPay discount incentive on Internet. Nonetheless, operationally, we handled the Disney dispute very well. But our billing and retention call centers were not fully back to normal until early October, so there was lingering customer net add impact early in the fourth quarter.
Turning to mobile. We added 594,000 mobile lines in the third quarter. Wireline voice customers declined by 286,000 in the third quarter. Overall market activity, churn and gross adds remained well below pre-COVID levels, partly driven by persistently low move rates. We continue to compete well in the portion of our footprint that is overlapped by fiber, but we also continue to see some impacts from fixed wireless access competitors in the lower usage and price-sensitive customer segments of our residential and SMB businesses. That product remains slower and less reliable than what we can deliver, and will be additionally constrained as consumers demand more and more data. In fact, high -- high data usage customers that switch to fixed wireless have a higher propensity to return to our Internet service. Despite our Disney dispute, third quarter residential Internet churn was at a new record low for the third quarter.
Our Spectrum Mobile product also continued to perform well in the quarter. The majority of new lines continue to come from existing Internet customers, though the percentage of lines coming from new customers has continued to increase. [Indecipherable] from other carriers as a portion of our gross additions grew year-over-year, despite much higher mobile sales. We also continue to see healthy data usage on our Spectrum One promotional lines and remain confident that these lines should perform well as long-term customers. In the third quarter of last year, we launched Spectrum One pilot programs in a handful of markets. The pilot program customers reached their 12-month anniversary during the third quarter of this year, and incremental churn on those lines was small and even less than we expected.
Turning to rural. Subsidized rural passings growth accelerated in the third quarter, with 78,000 passings activated. And we continue to expect approximately 300,000 new subsidized rural passings this year. As our RDOF build has progressed, we have identified roughly 300,000 adjacent passings along the way that are not in the sense of slot groups we want, but we will add to our network as we complete the RDOF build. Because of these adjacent passings, we now expect that our RDOF initiative will yield a total of 1.3 million passings to be constructed over a multi-year period. And while labor and equipment costs have both increased, we expect the average net cost per passing of these 1.3 million passings to be similar to our original RDOF net cost per passing estimate. We don't expect any potential BEAD build, subject to what Chris mentioned, to begin until 2025.
Moving to financial results, starting on Slide 6. Over the last year, residential customers grew by 0.2%, with new customer growth driven by Internet, partly offset by video-only customer churn. Residential revenue per customer relationship declined by 0.6% year-over-year, given a higher mix of non-video customers, growth of lower-priced video packages within our base and $63 million of residential customer credits related to the Disney blackout, partly offset by promotional rate step-ups, rate adjustments and the accelerated growth of Spectrum Mobile. Excluding Disney-related credits, residential revenue per customer relationship was flat year-over-year. As Slide 6 shows, in total, residential revenue declined by 0.3% year-over-year. Excluding Disney-related credits, residential revenue grew by 0.3% year-over-year.
Turning to commercial, SMB revenue declined by 0.9% year-over-year, reflecting lower monthly SMB revenue per SMB customer, primarily due to a higher mix of lower-priced video packages and a lower number of voice lines per SMB customer. These factors were partly offset by SMB customer growth of 1.3% year-over-year. Enterprise revenue grew by 3.7% year-over-year, driven by enterprise PSU growth of 5.9% year-over-year. Excluding all wholesale revenue, enterprise revenue grew by 5.5%. Third quarter advertising revenue declined by 20.3% or $97 million year-over-year due to less political revenue. Core ad revenue was down 1.8%, due to a more challenged advertising market, partly offset by our growing advanced advertising capabilities. Other revenue grew by 28.8% year-over-year, driven by higher mobile device sales. In total, consolidated third quarter revenue was up 0.2% year-over-year and up 1.5% year-over-year when excluding advertising and the impact of the $68 million in total Disney-related customer credits.
Moving to operating expenses and adjusted EBITDA on Slide 7. In the third quarter, total operating expenses were approximately flat year-over-year. Programming costs declined by 9.6% year-over-year due to a decline in video customers of 6% year-over-year, a higher mix of lighter video packages and a $61 million benefit related to the temporary loss of Disney programming in early September. These factors were partly offset by higher programming rates. We now expect that for the full year 2023, programming cost per video customer will decline by approximately 3% year-over-year. Other cost of revenue increased by 15.2%, primarily driven by higher mobile device sales and other mobile direct costs, partly offset by lower regulatory and franchise fees and lower ad sales costs.
Cost to service customers increased by 3.7% year-over-year, driven by previous adjustments to job structure, pay and benefits to build more -- a more skilled and longer tenured workforce, resulting in lower frontline employee attrition compared to 2022 and additional activity to support the accelerated growth of Spectrum Mobile. Those were partly offset by productivity improvements, including from tenure [Phonetic] investments, lower service transactions per customer and lower bad debt. Sales and marketing costs declined by 1.4%, primarily driven by lower labor costs, as we've lapped our prior year employee investments in sales and marketing. Overall, while we certainly had some additional overtime in our call centers, given the Disney dispute, it was not a material expense driver this quarter. Finally, other expenses grew by 2.5%, driven by labor costs. Adjusted EBITDA grew by 0.7% year-over-year in the quarter.
Turning to net income on Slide 8. We generated $1.3 billion of net income attributable to Charter shareholders in the third quarter, up from $1.2 billion last year, driven by higher adjusted EBITDA and lower other operating expense, partly offset by higher interest expense. Turning to Slide 9. Capital expenditures totaled $3 billion in the third quarter, above last year's third quarter spend of $2.4 billion. The increase was primarily driven by higher spend on upgrade rebuild due to our network evolution initiative, higher spend on line extensions driven by Charter's subsidized rural construction initiative and continued network expansion across residential and commercial greenfield and market fill-in opportunities, and higher CPE, driven by the purchase of Xumo devices for our launch earlier this month.
For the full year 2023, we now expect capital expenditures to total approximately $11.2 billion. Capital expenditures, excluding line extensions, should total approximately $7.2 billion, higher than our previous expectation. The increase reflects additional Xumo CPE purchases and an acceleration of network spend related to future high-split markets, including inventory accumulation and other preparation activities like walk-out and design and proactive equipment swap-outs of both DTAs and MPEG2 boxes. As Chris noted, we continue to expect to spend approximately $100 per passing to evolve the network to offer multiple gigabit speeds. There has been no change to our longer-term network evolution capex outlook. We also continue to expect 2023 line extension capital expenditures to total approximately $4 billion. We are working through our 2024 operating plan right now. Given the greater subsidized rural passings and construction opportunity we currently see, we may partially fund that opportunity by very modestly slowing our network evolution plan as Chris mentioned. And as we complete our 2024 plans, we will provide a more detailed outlook on our fourth quarter 2023 call in January.
I want to highlight that capital expenditures, excluding line extensions and network evolution as a percentage of total revenue have remained consistent since 2021. And following the completion of our network evolution initiative, capital expenditures excluding line extensions as a percentage of revenue should decline to below 2022 level, which has important long-term cash flow implications. As Slide 10 shows, we generated $1.1 billion of free cash flow this quarter versus $1.5 billion in the third quarter of last year. The decline was primarily driven by higher capex, mostly driven by our network evolution and expansion initiatives.
A couple of brief comments on working capital and cash taxes before turning to the balance sheet. Excluding the impact of mobile devices, we now expect our full year 2023 change in working capital to be negative by a few hundred million dollars, given the timing of capital expenditures and lower-than-expected accrued programming at year-end. On cash taxes, we did have a lower cash tax payment in the third quarter, which is just a timing difference. The full year cash tax outlook, which I provided during our fourth quarter 2022 call still stands. We finished the quarter with $97.6 billion in debt principal. Our current run rate annualized cash interest is $5.2 billion. At of the end of the third quarter, our ratio of net debt to last 12-month adjusted EBITDA was 4.45 times. And we intend to stay at or just below the high end of our 4 times to 4.5 times target leverage range.
During the quarter, we repurchased 2 million Charter shares and Charter Holding common -- Holdings common units, totaling $854 million, at an average price of $421 per share. Our 2023 EBITDA growth has been pressured by significant investments we've made in the future growth of our business. As we move toward 2024, pressure on our EBITDA growth will begin to abate, with growing transaction efficiency as we benefit from building employee tenure and easier comps as we have now lapped the most -- the impact of those employee investments. Lower transactions in our mobile business, which drove down -- which drive down our per customer cost of service, and building as we move into next year, revenue growth acceleration from the roll-off of our mobile free line offers and positive impact from political advertising.
In addition, faster pacing of our rural build should bring additional positive impact to customer net additions next year. In the longer-term, the competitive impact in operational efficiencies from our network evolution will drive a stronger broadband business. Convergence momentum will improve our churn and generate financial growth for both broadband and mobile, and transformational changes to the video business can enhance the value of our product for our connectivity customers. The investments we have been making and will continue to make are set to drive the growth of our business going forward.
Operator, we're now ready for Q&A.
