Cable giant Comcast
Comcast executives said Thursday the company will shift its focus to its mobile business after reporting a loss of 139,000 residential broadband customers during the fourth quarter.
Broadband has long been the growth engine of the cable industry, especially after the exodus of cable TV customers. Although broadband segment revenue remains stable, Comcast, like its cable peers, has been in the midst of a slowdown in customer growth, which has concerned investors in recent years.
Shares of Comcast fell 11% Thursday.
Company executives said during Thursday’s earnings call with investors that the company will shift its strategy to package mobile with broadband in a bid for more customers.
The stagnation stems from a number of factors, primarily the rise of wireless providers such as VerizonT-Mobile
“In short, competitive conditions remain intense, dynamic and varied across our footprint and customer segments,” Comcast President Mike Cavanagh said on Thursday’s investor call. “And we see no signs of this changing in the near term.”
Mobile moves
In 2022, Comcast and fellow cable giant Charter Communications
Executives have cited reasons such as the slowdown in buying and selling of homes — noting there are fewer people signing up for cable when they get a new home — as well as a drop-off in additions following robust growth at the height of the Covid pandemic, when lockdowns sent Americans home to work and learn.
But the rise of fixed wireless offerings from Verizon and T-Mobile has significantly ramped up competition. In December, Comcast Cable CEO Dave Watson called out the dynamic and warned of a fourth-quarter loss of 100,000 customers. Thursday’s announcement amounted to deeper-than-projected subscriber losses.
The so-called overbuilding of fiber internet has contributed to the competition, as has fixed wireless, a 5G high-speed broadband offering that is an alternative to cable broadband. Comcast in the past has dismissed fixed wireless as “an inferior product.”
On Thursday CFO Jason Armstrong said the expectation is that fixed wireless, and likely satellite companies, will be “carving out a permanent part of the market.” He also noted cable’s increasing broadband speeds as an advantage.
In response, Comcast is looking to mobile to both grow and maintain its customer base.
“While we are the incumbent in the $80 billion U.S. residential broadband market, we are the challenger in the far larger $200 billion U.S. wireless market,” said Armstrong. “Wireless is an integral part of our broadband strategy.”
Comcast now counts more than 7.8 million mobile lines, or 12% penetration of its residential broadband customer base, giving it a “long runway ahead.”
Comcast launched Xfinity Mobile in 2017, while Charter started offering mobile in 2018. The two biggest cable companies in the U.S. have touted consistent quarterly gains of mobile lines since then. Smaller operators such as Altice USA and Cox have also added the offering.
Comcast and its cable peers’ mobile offerings rely on the wireless network of Verizon, as well as customers’ home broadband networks and Wi-Fi hotspots. Only broadband customers of Comcast can sign up for mobile service through the company.
Cable companies have said their mobile businesses reduce so-called churn, or the loss of customers, and have been key to gaining new subscribers and driving revenue growth.
Cavanagh on Thursday said the company would push to simplify its bundles, following the lead of Charter’s mobile and broadband offerings. In September, Charter unveiled a series of changes to its plans, including bundles with mobile, with CEO Chris Winfrey telling CNBC the company “wanted to make a bold statement.”
Disclosure: Comcast owns CNBC parent company NBCUniversal.
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