With first quarter results just around the corner, analysts don't expect US cable operators to see an overall uptick in broadband subscriber growth. That's due in part to ongoing slow housing move activity and competition from fixed wireless access (FWA) services that are snapping up the bulk of the growth, particularly on the lower end of the broadband market.

"We don't expect earnings to be a meaningful catalyst for Cable stocks with recent bearish commentary on continued low volume environment," the analysts at TD Cowen explained in their first quarter 2023 earnings preview of the US cable market.

Figure 1: (Source: Piotr Malczyk/Alamy Stock Photo)

For the quarter, TD Cowen expects major US cable operators to head slightly back to negative territory, with combined net broadband subscriber losses of 2,000.

Drilled down further, they expect Comcast to shed about 25,000 residential broadband subs compared to a gain of 60,000 at Charter Communications. Altice USA is expected to lose 15,000 broadband subs – a loss of 50,000 subs on its hybrid fiber-coax (HFC) network against a gain of 35,000 fiber-to-the-premises (FTTP) customers. They also expect Cox Communications to add 10,000 broadband subs in the quarter and Cable One to tack on about 4,000.

Cable broadband sub growth could eventually be stoked by participation in the $42 billion Broadband Equity, Access and Deployment (BEAD) program. However, TD Cowen predicts funding for the program to gain steam in 2024 and beyond.

Meanwhile, it's clear that cable operators now regard average revenue per unit (ARPU) growth as their primary broadband success metric.

FWA taking its toll

Still, TD Cowen sees much of cable's near-term broadband pain coming from lower housing move activity. However, they added, "FWA success is taking its toll on the low-end (not necessarily taking from Cable but taking from DSL that Cable used to win)."

Comcast, as one example, is attempting to blunt FWA competition with a limited-time $25 per month, 200 Mbit/s (downstream) broadband service promo.

Led by expected FWA subscriber gains at T-Mobile (+412,00) and Verizon (+265), TD Cowen expects the entire US FWA sector to add about 684,000 subs. That is compared to a similar gain in the prior quarter and up from adds of 390,000 in the year-ago period.

Fueled by FWA, TD Cowen expects the full US broadband industry to add about 711,000 broadband subscribers in Q1, down 6% from year-ago adds of 759,000.

Among some top telcos, the analysts expect AT&T to lose 15,000 broadband subs as fiber gains won't be quite enough to take the company over the top. Verizon is expected to add 60,000 Fios broadband subs against a loss of 15,000 residential DSL subs, and Frontier is expected to turn in a broadband sub gain of 24,000 (79,000 FTTP subs against a loss of 55,000 subs on copper lines).

Cable's mobile story still strong

Cable's story in mobile is expected to remain a bright spot as some operators accelerate the use of new convergence bundles that glue together mobile with home broadband.

TD Cowen sees Charter adding 515,000 mobile lines in Q1 2023, not enough to eclipse the record 615,000 mobile lines added in Q4 2022. They expect Comcast to add 340,000 mobile lines in Q1 2023.

The analysts believe Altice USA will add about 9,000 mobile subs in Q1 2023, with help coming later in the year from emerging convergence offers that will help the company add about 51,000 for full 2023.

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— Jeff Baumgartner, Senior Editor, Light Reading