Comcast ekes out small broadband gain as wireless adds near another record

Comcast's broadband business held the line against fiber and fixed wireless access (FWA) competition in the first quarter of 2023 as the operator added 3,000 subscribers, beating analysts' expectations that Comcast might lose around 27,000.

Meanwhile, Comcast neared another quarterly record of wireless line additions in the period, but saw video subscriber losses widen significantly.

Figure 1: (Source: Comcast)

Back to broadband, Comcast's 3,000 net domestic subscriber adds kept its domestic base around 32.32 million, but well below the 253,000 it added in the year-ago quarter.

Amid rising competition from fiber and FWA rivals and continued low housing move activity, Comcast doesn't expect to see much in the way of broadband subscriber gains in the near-term. In fact, it's already warning that broadband adds in a second quarter will be lower due to traditional "seasonality" driven in part by students returning home and in areas such as Florida.

"While the marketplace is competitive such that adding subs in the near term is likely to be a challenge, I fully expect we will eventually return to subscriber growth," Comcast President Mike Cavanagh said on today's earnings call.

Update: Comcast's Q1 broadband subs gain was not all that impressive against historical growth trends for the segment. But it does illustrate that US cable's prospects in broadband isn't going off a cliff, Craig Moffett, analyst with MoffettNathanson (a unit of SVB Securities), explained in a research note following today's earnings call.

"No one would argue that Comcast's small gain changes the narrative about broadband, but for what it's worth, it does fit the thesis that Comcast, like all of their broadband peers, is facing a slowing market rather than runaway share loss," he wrote.

In the meantime, Comcast continues to view average revenue per user (ARPU), which rose 4.5% in the quarter, as the key metric of its broadband business.

Though Comcast sees FWA as a "substandard" solution focused on the lower end of the market, the operator has applied some focus on promotions that target that particular segment. In February, for example, Comcast began to offer a new standalone 200 Mbit/s home broadband service that carries a 24-month promotional price of $25 per month.

"We saw an uptick" from that offer, Dave Watson, president and CEO of Comcast Cable, said. Comcast, he added, intends to keep going in and out with offers that address all segments of the broadband market. "I think there was more action with fixed wireless on the low end [in Q1], and the offer served us well."

Mobile base climbs to 5.66 million lines

Comcast is also focusing on convergence bundles that combine home broadband with Xfinity Mobile, a service that is underpinned by an MVNO deal with Verizon and complemented by Comcast's extensive Wi-Fi network.

As for the mobile segment, Comcast added 355,000 more lines in Q1 2023, narrowly missing the record +365,000 it added in the prior quarter. However, Comcast's mobile line gains in the period set a new record for a first quarter.

Comcast ended Q1 with 5.66 million mobile lines. Domestic wireless revenues hit $858 million, up 26.7% versus the year-ago period.

Figure 2: Click here for a larger version of this image.

Comcast's Xfinity Mobile service is still less than 10% penetrated into the company's broadband subscriber base. "So, it gives us a long runway ahead," Watson said.

Comcast had little to add about its intentions to use CBRS spectrum to offload mobile data in dense, high-traffic areas. Watson said Comcast was continuing to compare notes on that with mobile operations partner Charter Communications. "There's more to come on that, but we will be testing that throughout the year," Watson said.

Pay-TV losses deepen as focus turns to streaming platforms

Comcast's pay-TV business continues to struggle. Comcast lost 614,000 pay-TV subs in the quarter, widened from a year-ago loss of -512,000. Comcast's domestic video subscriber base shrunk to 15.52 million.

Watson stressed that Comcast will continue its strategy to avoid chasing after unprofitable video subs using steep discounts and promotions. But many customers who drop Comcast's video service are retaining broadband.

"Our full disconnect churn – video and broadband – remains at record low levels and is down nearly 25% since the pre-pandemic period," Watson said. "The net result is broadband is faring well and holding the line in terms of the base."

Meanwhile, Comcast continues to plow more investment in streaming platforms that support its X1 pay-TV service, its Flex box for broadband-only subscribers and the recently formed Xumo national streaming joint venture with Charter Communications.

"If you think about less linear [TV] and more streaming, is that trend going to continue? Absolutely, it seems very, very likely," Comcast CEO and Chairman Brian Roberts said.

The Jeff Shell situation

Comcast execs also addressed the elephant in the room – the recent departure of NBCU CEO Jeff Shell following an investigation into his having an "inappropriate relationship," reportedly with CNBC anchor Hadley Gamble.

Roberts called the situation with Shell "obviously a tough moment" for the company, but said NBCU has a deep bench that includes execs who have been leading divisions within the unit for at least ten years.

Cavanagh is taking over Shell's duties on an interim basis, but it's clear that there's no big changes coming anytime soon. Cavanagh said he expects to be in that role "for a while."

Cavanagh didn't offer a timeline for Shell's long-term replacement, but sees his interim role at NBCU as "quite sustainable." 

Cavanagh said he doesn't expect NBCU to make any big strategic changes following Shell's departure.

"Job number one for me is just to settle things down and makes sure the businesses and the business leaders at NBCU remain focused on the job at hand," he said. "I frankly don't think the business is going to miss a beat."

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— Jeff Baumgartner, Senior Editor, Light Reading