& cplSiteName &

Comcast Revs Up Capex

Alan Breznick
2/1/2007
50%
50%

Despite racking up another record-setting quarter and year of cable subscriber growth, Comcast Corp. (Nasdaq: CMCSA, CMCSK) sent a chill up Wall Street's spine this morning by vowing to boost capital spending markedly this year.

In reporting fourth-quarter earnings today, North America's largest MSO said it plans to spend a record $5.7 billion on cable plant upgrades and new service launches in 2007. That's up 24 percent from $4.6 billion in cable capex last year and up more than 40 percent from $4 billion in 2005.

The news stunned analysts, who had been expecting Comcast to spend $4.5 billion on capex this year. In a report today, analyst Craig Moffett of Sanford C. Bernstein & Co. Inc. noted the spending will cut into the MSO's free cashflow growth, keeping it flat despite higher revenues and income. He called the development "a clear disappointment."

But the news will likely cheer cable equipment suppliers. Jason Ader, analyst at Thomas Weisel Partners , argued in a research note today that such vendors as Arris Group Inc. (Nasdaq: ARRS) and Harmonic Inc. (Nasdaq: HLIT) stand to reap the benefits from Comcast's planned splurge. He sees boosts for Arris's CMTS and E-MTA businesses, as well as Harmonic's digital video encoder and VOD gateway products.

Of the projected $5.7 billion, Comcast officials said they will spend about 75 percent, or more than $4.2 billion, on rolling out new equipment for new products and services including VOIP, faster cable modems, high-definition TV (HDTV), video-on-demand (VOD), and commercial services. The rest goes to plant upgrades and to bandwidth expansion technologies including switched digital video, digital simulcasts, and fiber node splits.

Included in the capex pile are $120 million to $180 million to upgrade the recently acquired Adelphia Communications cable systems, and a $250 million investment to rolling out a new commercial VOIP product.

"We think we can capture market share now, and this is the time to extend our lead in the market," Comcast chairman and CEO Brian Roberts told analysts in the company's earnings call this morning. "We're going to invest capital to drive that growth."

Comcast executives trotted out colorful charts to buttress their case for the unexpected spending surge, showing 75 percent of that spending will be "variable and revenue-driven." The charts also show that the capital cost of each new revenue generating unit (RGU) will continue to fall, to $814 this year from $1,300 in 2005.

"We get great returns on this investment," said John Alchin, an outgoing (not to say flamboyant) CFO of Comcast. "We are seeing accelerated RGU additions supported by a capital investment with great returns, and our capex per new addition is projected to decline approximately 40 percent over a two-year period."

Comcast, which also plans to spend $250 million this year building its new corporate headquarters in downtown Philadelphia, unveiled the unsettling capital spending projections while trumpeting its latest gains in subscribers, revenues, and profits. The MSO set new quarterly growth records again as it continued to bask in the glow of its new VOIP product and triple-play bundle.

Topping off what its officials termed the company's "best year" ever, Comcast netted more than 1.6 million RGUs in the fall quarter. The gains include almost 1.5 million units in "historical" Comcast systems and another 150,000 in systems acquired from Adelphia and Time Warner Cable Inc. (NYSE: TWC)

The MSO's VOIP offering, known as "Comcast Digital Voice" (CDV), clearly led the way once more. Comcast signed up an industry-high 508,000 IP phone customers in the quarter, which translates to a rate of nearly 40,000 a week, to wind up the year with more than 1.5 million new phone subscribers.

As a result, Comcast closed out 2006 with a total of 1.855 million VOIP subscribers, only about 5,000 below cable industry leader Time Warner Cable. In their earnings call today, Comcast executives noted that the company has since cleared the 2 million customer mark, presumably moving it ahead of Time Warner.

Besides the record VOIP subscriber gains, Comcast also added 488,000 cable modem and a record 613,000 digital cable subscribers in the fourth quarter. In addition, it netted 110,000 basic cable subscribers, setting yet another quarterly record for the company.

Thanks to these gains, Comcast's fourth-quarter revenue jumped to $7.03 billion, up 30 percent from $5.42 billion in the year-earlier period. Likewise, its net income nearly tripled to $390 million, up from $133 million the year before.

Comcast officials said they expect to set new records again this year, projecting that they will add another 6.5 million RGUs. That total includes a projected pickup of 2.6 million VOIP subscribers.

— Alan Breznick, Site Editor, Cable Digital News

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Light Readingís Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
LIVE NOW!
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
UPCOMING COURSE SCHEDULE
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (1) comment


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BTís Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
LRTV Custom TV
Digital Object Architecture

11|11|16   |     |   (0) comments


Digital Object Architecture provides a basic information infrastructure that can facilitate interoperability between or among different systems, processes, and other information resources, including different identity management systems. Digital objects are networked objects that are named by digital object identifiers and instantiated by an infrastructure service ...
LRTV Custom TV
BT's Openreach Has High Hopes for Long-Reach VDSL

11|11|16   |   06:04   |   (0) comments


Peter Bell, Network Portfolio CIO at BT's access business Openreach, talks about the operator's trial of a new broadband access technology called Long Reach VDSL.
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
AT&T Debuts DirecTV Now on New Video Platform
Mari Silbey, Senior Editor, Cable/Video, 11/28/2016
Apple Seeds 5G? Seeks 'Multi-Gigabit' Chip Designer
Dan Jones, Mobile Editor, 11/30/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Samsung Bows to Investors, Considers Revamp
Iain Morris, News Editor, 11/29/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.