Comcast, Charter to rake in 16.5M mobile lines by 2025 – forecast
A revised forecast from research firm MoffettNathanson paints an even rosier picture for the still-budding mobile businesses of Comcast and Charter Communications.
Reflecting an updated understanding of the benefits Comcast and Charter enjoy because of Wi-Fi data offloading, MoffettNathanson's new financial analysis and forecast (registration required) expects the cable operators to generate more mobile subscribers, higher mobile revenues and EBIDTA, and improved ARPU (average revenue per user) by the end of 2025 when compared to a forecast issued in June 2021.
Based on the new forecast, MoffettNathanson analyst Craig Moffett expects Comcast to end 2025 with 9.05 million mobile lines, ahead of an earlier forecast of 7.04 million. Charter, meanwhile, is expected to have 7.47 million mobile lines by the end of 2025, up from an earlier prediction of 6.54 million. Combined, the companies are expected to have 16.5 million mobile lines by the end of 2025.
Improving mobile economics
MoffettNathanson also expects Comcast's and Charter's underlying mobile financials to improve versus the prior forecast.
Comcast is now expected to generate $5.85 billion in mobile revenues by year-end 2025 versus a prior expectation of $4.63 billion, with mobile accounting for 8.2% of cable segment revenues. Charter is now expected to pull down wireless revenues of $4.32 billion by year-end 2025, up from an original expectation of $3.63 billion, with mobile accounting for 7.2% of total revenues.
Additionally, mobile EBIDTA at Comcast is expected to climb to $403 million by the end of 2025, versus an original expectation of just $34 million. Charter's wireless EBIDTA is expected to reach $326 million by the end of 2025, up from the previous prediction of $46 million.
Moffett attributes the companies' ongoing and future success in mobile to multiple factors, including new and aggressive multi-line and family pricing, increasingly attractive economics from their respective MVNO deals with Verizon, the potential use of CBRS spectrum to help offload a portion of MVNO costs and better-than-expected Wi-Fi offload.
Focusing on the Wi-Fi factor
Better Wi-Fi offload "suggests that Cable's costs are lower, and margins higher, than broadly appreciated," MoffettNathanson analyst Craig Moffett explained in the report.
Citing proprietary data from OpenSignal, Moffett noted that the average Verizon Unlimited subscriber offloads 77.7% of their data onto Wi-Fi, with 23.3% going to the cellular network. By comparison, Comcast customers offload 93.8% of their data onto Wi-Fi, and just 6.2% goes to the cellular network. Charter mobile customers enjoy a similarly-sized gap between Wi-Fi and cellular network usage, according to OpenSignal.
Comcast's own data reflects this trend. The operator reported in February that smartphones were the biggest consumers of Wi-Fi in 2021, by a large margin.
"[T]he economic implications are profound," Moffett explained. "Using half as much data as we had previously modeled means that direct variable data costs under the contract are only half as much as we had previously modeled. And margins … are therefore much higher."
Those updated offload figures also arrive ahead of cable's anticipated use of CBRS networks in dense, high-use areas. Charter is pushing ahead with CBRS deployment in at least one market. Comcast has been less aggressive, suggesting that it is in no big rush to put its CBRS spectrum to use.
As the CBRS offload opportunity enters the picture, Charter and Comcast will need to rely on eSIMs to prioritize the CBRS network where it's available and fall back on the MVNO network where it's not, Moffett noted.
Though eSIMs are becoming commonplace in Samsung Galaxy phones and are beginning to show up in the new generation of Apple iPhones, Moffett predicted that the benefit to Charter and Comcast wouldn't be immediate. But based on typical handset replacement cycles, "by the time Cable has meaningfully executed on their strand-mounted small cell strategy, eSIMs will be in the preponderance of phones," he said.
Cable's offload potential still not known
Moffett acknowledged that the amount of mobile traffic that cable operators will eventually be able to offload is "all over the map," with estimates as high as 50% and as low as 10%.
"We believe estimates in the range of 10-20% are appropriate," the analyst noted. "Perhaps eventually Cable will target more traditional offload approaches (other spectrum bands, traditional fiber-fed small cells, urban deployments), taking these numbers materially higher, but that's not the plan for now."
- US cable holds steady with 29% of mobile adds in Q4
- 'We don't have to do CBRS to make mobile work,' says Charter CEO
- Comcast, Charter CEOs point to emerging CBRS partnership
- Comcast's wireless biz turns the corner
- Charter tests high-splits, preps CBRS field trial for early 2022
- Spectrum Mobile 'profitable as a standalone business,' Charter CEO says
- Comcast's wireless biz turns the corner
- Comcast in no rush to deploy CBRS spectrum
- New ruling reopens door for Cox's mobile launch
— Jeff Baumgartner, Senior Editor, Light Reading