Verizon-Frontier deal a 'validation' of our convergence strategy, says Comcast CFO

Verizon's $20 billion move to acquire Frontier Communications as part of an effort to expand and scale its convergence strategy is considered a compliment at Comcast.

"That's validation of what we're doing. People are coming our way," Comcast CFO Jason Armstrong said Thursday at the Citi Investor Conference when reacting to this morning's deal.

"If you believe we're headed toward convergence… we're sort of the original innovators of convergence, he said. "I think we have an incredible hand to play in convergence."

While it's true that Comcast and other cable operators have had their share of fits and starts getting into the mobile business, the operator's latest approach – an MVNO deal with Verizon paired with the deployment of a large Wi-Fi network and targeted CBRS spectrum rollouts – has been successful with respect to adding heaps of mobile lines.

Comcast's Xfinity Mobile unit added 322,000 mobile lines in Q2 2024, raising its total to 7.19 million. US cable's share of total mobile phone net adds (both postpaid and prepaid) was roughly 54% in the period, according to a MoffettNathanson analysis.

Armstrong also held that Comcast, with 63 million homes passed by its wireline networks and DOCSIS 4.0 upgrades in motion, continues to maintain a sizable network coverage advantage compared to the current, combined fiber footprints of AT&T, T-Mobile and Verizon, even when factoring in the proposed Frontier acquisition.

Related:Verizon feeds its urge to converge with $20B play for Frontier

"If you take their plans for coming years through JVs and acquisitions and organic plans to build, it adds up to roughly on par to where we are in the next several years," Armstrong said. "When you see wireless companies investing aggressively in fiber, they're telling you that... the broadband relationship may be center of the plate in the overall relationship."

Comcast, like some of its cable industry peers, is using mobile to boost its broadband business. Though cable home broadband losses have stabilized a bit (Comcast lost 120,000 broadband subs in Q2, fewer than what analysts were expecting), cable operators are still struggling to return that key part of the business back to subscriber growth.

Much of that pain has come from fixed wireless access (FWA) competition from T-Mobile, Verizon and, to a lesser degree, AT&T. Comcast, Armstrong stressed, is trying to segment that part of the market with tiers and options that deliver speeds and pricing that's similar to what FWA rivals have in the market.

Update: AT&T's opinion echoes Comcast's

Speaking today at Bank of America's Media, Communications and Entertainment Conference, AT&T CTO Pascal Desroches noted that AT&T has nearly 28 million locations passed with fiber today and is "well on our way" to reaching 30 million-plus by the end of 2025.

Related:Comcast focuses on market segmentation as broadband sub losses continue

AT&T, he added, has identified 10 million to 15 million incremental locations beyond that inside the company's footprint, which does not include the 1.5 million initial locations being pursued by the AT&T-BlackRock Gigapower joint venture.

Echoing Armstrong, Desroches said the proposed Verizon-Frontier transaction "just affirms the strategy we laid out four years ago. [We are] just happy others are following along."

And, similar to what Verizon is seeing, AT&T is achieving better penetration of mobile (about 500 basis points) inside its own fiber footprint.

"It doesn't mean that you can't sell wireless by itself or fiber by itself, but the benefits of convergence are very, very strong," Desroches said. "And the good news is...we have plenty of runway to add more converged subscribers, and we're building fiber every day."

Fiber still the long-term threat

Armstrong said Comcast expects FWA to maintain a "sizable niche" in the broadband market, governed by growing consumer data usage patterns. But fiber is still viewed as the long-term broadband competitor.

Comcast faces fiber competition in about half its footprint today, and sees it becoming available in a "significant" portion of its markets over time, he said.

"There will be in the vast majority of our footprint two multi-gig, symmetrical wires going into the home. One is ours, and one will be...whichever fiber company we're competing against," Armstrong said.

AI may give mobile a boost

The exec also hinted that Comcast might be a more active participant in smartphone subsidies and promotions with a possible AI-led "super-cycle" for mobile devices on the horizon.

"We're positioned well to play a role there" if AI drives more consumers to flock to new devices, Armstrong said. "It's something we're studying."