Comcast Sub Growth Weakens in Q4
The MSO signed up just 184,000 new high-speed Internet customers in the period, versus 341,000 net adds a year ago. The story was similar on the digital voice front, as Comcast added 344,000 new VoIP subs, compared to 618,000 a year earlier.
Comcast added 247,000 digital video subs in the fourth quarter, down from 530,000 additions in the year-ago quarter. That barely washed out a loss of lost 233,000 basic video subs in the fourth quarter. In comparison, Comcast lost 100,000 basics in the fourth quarter of 2007, and 148,000 in the third quarter of 2008.
"The weak economy is impacting the consumer, particularly on housing growth, vacancies and moves, providing us with fewer opportunities to sell new services," Comcast CFO Michael Angelakis said on this morning's earnings call.
Despite slower advanced service subscriber growth across the board, Comcast's financial results met or exceeded analyst estimates. Fourth-quarter revenues hit $8.77 billion, up 9 percent year-over-year, a bit better than the $8.6 billion expected by Wall Street. The MSO posted net income of $412 million (14 cents per share), down from $602 million (20 cents per share) and impacted in part by a $600 million pretax write-down on Comcast's investment in the Clearwire LLC (Nasdaq: CLWR) WiMax joint venture. (See Cable Plays Clearwire Card, Comcast Posts Q4 , and Comcast Does Dividend .)
Also, on the plus side, Comcast's average revenue per user (ARPU) rose 9 percent, to $114.
Comcast's financial performance in the fourth quarter demonstrated the power of the MSO's subscription business, but the current economy represents "maybe the toughest we've known in business," Comcast chairman and CEO Brian Roberts said.
Comcast did not provide a specific figure, but the company expects capital expenditures to decline this year, both in absolute dollars and as a percentage of revenue. Capex for 2008 was $5.7 billion, down 8 percent versus $6.3 billion in 2007. Meanwhile, Comcast last year laid off roughly 3,300 employees and reduced its operating divisions from five to four as part of an effort to pare down operating expenses.
Still aggressive with Docsis 3.0, 'all-digital'
Although Comcast will trim capex this year, the company does intend to remain aggressive with its rollout of Docsis 3.0, an "all-digital" project, and with its budding business services initiative.
As for Docsis 3.0, a platform that uses channel-bonding techniques to produce shared speeds in excess of 100 Mbit/s, Comcast said it will have 65 percent of its network enabled for wideband services by the end of 2009, up from about 30 percent today. (See Comcast Widens Wideband Footprint .) The MSO expects to have all of its systems wired up for Docsis 3.0 by the end of 2010.
Comcast's present "Extreme" wideband tier tops out at 50 Mbit/s downstream, but an Internet service that supports speeds of 100 Mbit/s or more is on the roadmap.
Comcast is also moving ahead with an "all-digital" project that reclaims as many as 60 analog channels, giving the MSO extra capacity for Docsis 3.0, more video on demand (VoD), and an expanded menu of high-definition content.
This year, Comcast expects to have this analog reclamation project underway in systems passing nearly half of its 24.1 million customer base. Thus far, Comcast already has this "upgrade" (internally referred to as "Project Cavalry" ) deployed or just getting started in Portland and Salem, Ore.; Seattle and other parts of Washington; the Bay Area; and Comcast's hometown of Philadelphia. (See Comcast 'Cavalry' Rides Into NoCal and Comcast Seeds Digital Shift With Free Boxes.)
"At this date, we've purchased millions of digital converters and started migrating hundreds of thousands of customers," said Comcast cable division president Steve Burke, referring to a simple, one-way Digital Terminal Adapter (DTA) the MSO is using to help fuel the project. (See Comcast Confirms Digital Dongle Project.)
Angelakis said the MSO expects to spend between $400 million and $500 million this year on its Docsis 3.0 and all-digital projects.
Comcast, Burke added, will also earmark dollars to help grow a business services initiative that saw revenues rise 41 percent, to $558 million during 2008. Comcast has set a goal to capture about 20 percent of an estimated $12 billion to $15 billion of small- and mid-sized business revenue in its footprint.
— Jeff Baumgartner, Site Editor, Cable Digital News