Comcast sheds broadband subs, sees weaker wireless growth in Q3

Comcast lost 19,000 broadband customers, including 17,000 residential subs, in a third quarter that also saw a slowdown in mobile line growth.

Residential broadband average revenue per user (ARPU) growth, a metric that Comcast now deems more important than sheer subscriber growth, was up 3.9% in Q3 versus the prior quarter. However, that number also decelerated a bit (down from prior ARPU growth of 4.5%) because Comcast was a bit more aggressive in pursuing broadband customers on the lower end of the market in the earlier part of the year.

The broadband market remains competitive, particularly on that lower end, Comcast CFO Jason Armstrong said on today's earnings call. During the quarter, Comcast "recalibrated" by pulling back on some of its promotional offers targeting that segment. In February, Comcast targeted fixed wireless access (FWA) competition with a promotion featuring a standalone 200 Mbit/s home broadband service for $25 per month (including the cost of the gateway) for a period of 24 months.

Comcast, which ended the period with 27.77 million residential broadband customers, believes it will return to broadband subscriber growth over time as the operator continues to push ahead with network upgrades and the expansion of its broadband network footprint. But in the near term, Comcast expects to turn in somewhat higher broadband subscriber losses in Q4 compared to the loss of 18,000 reported in Q3, Amstrong said.

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Investors weren't wild about that prediction as Comcast shares dipped $2.98 (-6.97%) to $39.77 each in Thursday morning trading.

Armstrong said Comcast is on pace to meet or exceed its goal to build its network to 1 million new homes and businesses in 2023 and accelerate that further in 2024.

Comcast is also making progress with its hybrid fiber/coax (HFC) network upgrades, including its initial launch of DOCSIS 4.0 services in Colorado Springs. Comcast Cable CEO Dave Watson said Comcast has completed "mid-split" upgrades that dedicate more spectrum to the upstream to about 30% of the operator's network, a number that should rise to 40% in 2024.

Xfinity Mobile climbs to 6.27 million lines

Turning to wireless, Comcast tacked on 294,000 Xfinity Mobile lines in Q3, down from a gain of 333,000 lines in the year-ago quarter, extending its total to 6.27 million. Analysts expected Comcast to add 334,000 wireless lines in the period.

Comcast pulled down wireless revenues of $917 million in Q3, up 16.2% versus the year-ago period.

With just 10% of its residential broadband base penetrated, Comcast feels its mobile business has a long runway for growth.

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Comcast hopes to accelerate mobile line growth amid the launch of the new Apple iPhone along with some relatively new converged offers that combine mobile with home broadband. Specifically, Comcast hopes to stoke growth with a new buy one line/get one promotion for the iPhone that was introduced toward the end of Q3 and expanded in earnest in Q4, Watson noted.

Business services remains a growth engine for Comcast as revenues at that segment rose 4.7% to $2.32 billion. That unit is undergoing a leadership change. Former Comcast Business CFO Ed Zimmermann was recently named president of the division, succeeding Bill Stemper. Stemper, who had led Comcast Business since its inception in 2006, has transitioned to the role of chairman emeritus at the unit.

Pay-TV losses continued. Comcast shed another 490,000 residential video subs in Q3, lowering its total to 14.49 million. However, those losses were an improvement from a year-ago loss of 561,000 subs.

NBCUniversal's Peacock streaming service added 4 million paid subs in Q3, raising its total to 28 million. Peacock generated Q3 revenues of $830 million, up 64% year-over-year. Comcast still expects 2023 to be Peacock's peak year for EBITDA losses, but it now sees those losses coming in at about -$2.8 billion versus the original loss outlook of -$3 billion.

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