& 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
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
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.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom on what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
LRTV Custom TV
Nokia Introduces Virtual Service Router for More Rapid Service

4|6|17   |     |   (0) comments


James Cumming, product line manager for virtualized service routers at Nokia, demonstrates how the virtual router based off the Nokia ecosystem changes the network function experience.
LRTV Custom TV
The Keys to SD-WAN Success

4|6|17   |     |   (0) comments


Versa Networks CEO Kelly Ahuja talks about the key requirements for service provider-managed SD-WANs.
LRTV Custom TV
Intel & Cisco on Joint 5G Solutions

4|5|17   |     |   (0) comments


Dave Ward, SVP and CTO of Cisco, is joined by Sandra Rivera, corporate VP and general manager of network platforms group of Intel, on the revolutionary 5G technology that changes networking and computing fundamentally.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Time for a Telecom Reboot
Steve Saunders, CEO and founder, Light Reading, 4/19/2017
Comcast Ready for Clash With Hulu
Mari Silbey, Senior Editor, Cable/Video, 4/18/2017
Unlicensed: It's What's Next for US Mobile Operators
Dan Jones, Mobile Editor, 4/19/2017
Verizon's Fiber Spend Won't End With Corning
Mari Silbey, Senior Editor, Cable/Video, 4/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Animals with Phones
Now That's an Ad Campaign Click Here
Meerkats to the rescue!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.