Comcast's wireless biz to reach profitability in 2021 'without any offload,' CFO says

Comcast's mobile business is poised to turn the financial corner and achieve profitability this year "without any offload" benefits, according to company CFO Mike Cavanagh.

Comcast's Xfinity Mobile service largely relies on an MVNO deal with Verizon. But Comcast gets a financial benefit – in the form of transport cost savings – when portions of wireless traffic are instead offloaded to Comcast's Wi-Fi network or, later, on new networks that utilize Comcast's licensed CBRS spectrum. Late last month, Charter Communications CEO Tom Rutledge estimated that his company could use its CBRS network to offload about one-third of its current MVNO traffic.

Comcast last year snapped up a swath of licensed CBRS spectrum covering the bulk of its traditional cable footprint, but, similar to a strategy underway at fellow cable op Charter Communications, Comcast will likely target deployments to high-traffic areas. And, even in those cases, initial deployments will be determined on a thorough cost/benefit analysis.

"It's optionality, really," Cavanagh said today at the Deutsche Bank Media, Internet & Telecom Conference, when asked to size up Comcast's spectrum intentions. "It's not a must-do to achieve any element of our plan, but it's simply an option that we'll capitalize in the future, if and when we like the cost-benefit of it … We may not do it if we find the economics of staying on-network get better as time passes."

Cavanagh also alluded that Comcast is in position to offer more flexible packages and services with Xfinity Mobile after "tuning up" the company's MVNO agreement with Verizon. He declined to jump the gun on the marketing plan, but the Comcast Business unit has already begun to offer mobile to some of its small and midsized business customers.

Meanwhile, the residential version of Xfinity Mobile, offered only to Comcast's broadband customers, has reduced churn by 20 basis points versus the control group, Cavanagh said. Comcast ended 2020 with 2.82 million mobile lines after adding 246,000 in Q4 2020.

"I think we're real. There's no one that doubts that anymore," Cavanagh said. "Where do we go next is more the question … I think we have a lot of runway ahead.

'Flex' viewed as another churn buster

Cavanagh also characterized Flex, Comcast's free streaming platform for broadband-only subs, as another churn buster for the company's key high-speed Internet business. He said Comcast is seeing a 15% to 20% reduction in churn among broadband-only customers with Flex versus broadband-only customers without flex.

"That's what we wanted to see. That's what we are seeing," he said. The business rationale of Flex, he added, "is to primarily make sure we bring down churn in the broadband business – the center of the plate product."

Comcast, which has deployed more than 3 million Flex boxes, also has ambitions for Flex that extend beyond broadband churn reduction. The company is exploring the idea of taking Flex outside the cable operator's footprint, but hasn't announced any specific plans. Comcast is also looking to license its X1 technology to smart TVs.

Cavanagh also touched on how Comcast Business fared during the pandemic. The unit raked in $8.2 billion in revenue in 2020 despite a slower rate of growth.

He said Comcast Business is seeing the small and midsized business segment start to bounce back and exceed prior year sales levels. Meanwhile, the larger piece of the commercial services sector, including enterprise, is not coming back quite as fast, due in part to longer sales cycles.

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— Jeff Baumgartner, Senior Editor, Light Reading

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