For Comcast, mobile glows while broadband slows

While broadband growth may be slowing down and video losses continue to pile up, Comcast can still count on its mobile business to carry the day.

The largest US cable provider just reported its highest quarterly wireless subscriber growth. At the same time, it gained fewer broadband customers than last year and and shed more than half a million video subs.

Subscriber and financial trends

Comcast added 318,000 mobile lines in Q1, a record quarterly haul since the company launched its Xfinity Mobile brand in 2017. The first quarter increase compared favorably with its year-ago gain of 278,000 subs.

As a result, Comcast ended the quarter with 4.29 million mobile lines in service. Wireless revenues in Q1 clocked in at $677 million, up from $513 million a year ago.

"It was a great quarter," said Dave Watson, CEO of Comcast Cable. Noting that mobile is now "fully integrated into everything we do in cable," he said "we absolutely believe our strategy is working."

Comcast added 262,000 broadband subs (residential and business) in Q1, down from its year-ago haul of 461,000 subs, to boost its grand total to 32.16 million.

Comcast's Q1 broadband sub gains did beat Wall Street's consensus forecast and came in higher than the 212,000 subs it added in Q4 2021. Its Q1 broadband revenues hit $6.05 billion, up from $5.60 billion a year earlier. Comcast officials also boasted that they achieved "the highest level of [broadband] customer retention on record for any quarter."

MoffettNathanson's Craig Moffett pointed out in a research note this morning, some of those Q1 2022 broadband sub gains may be illusory. That's because about one-third of the gains, or more than 80,000 sub adds, came from customers who were already on board but had been receiving free service through the company's temporary pandemic-relief programs. As a result, Moffett estimates that the MSO actually added more like 190,000 broadband subs in the quarter, below Wall Street's consensus forecast and well below both its Q4 total and last year's Q1 total.

"By one measure, when a subscriber starts paying is what counts," Moffett wrote in his research note. "But for run rate purposes, one might argue that the 'true' net add number is more like ~180K, a miss versus the same 214K StreetAccount consensus."

Comcast lost 512,000 total pay-TV customers (residential and business) in the quarter, compared to a year-ago loss of 491,000 subs. The MSO ended the quarter with 17.66 million video subs. Not surprisingly, then, Q1 video revenues also slid, falling to $5.53 billion, down from $5.62 billion a year earlier.

Business services revenues rose to $2.4 billion in Q1, up 10.6% from nearly $2.2 billion the year before and higher than the consensus forecast. Almost half of the increase was due to Comcast's acquisition of Masergy, which closed early in Q4 2021.

Cable capital expenses were relatively flat, as Comcast spent $1.36 billion in Q1 2022, representing 8.3% of total cable revenues. That compares to its year-ago spending of $1.37 billion, or 8.7% of total cable revenues.

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— Alan Breznick, Cable/Video Practice Leader, Light Reading

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