Some of the top US cable operators expect to eventually see quarterly broadband subscribers return to growth. But it's pretty clear those fortunes won't reverse in the first quarter of 2024.
The analysts at TD Cowen expect some of the largest US cable operators to lose 141,000 broadband subscribers in Q1 2024, resulting in a worst-ever first quarter for the industry. New Street Research expects US cable to lose about 130,000 residential broadband subs in the period.
TD Cowen expects cable earnings discussions to focus on average revenue per unit (ARPU) – a category that some operators now deem as more important than sheer subscriber growth – as well as mobility, network upgrades and expansions, and some updates on the possible risks wrought by the expected demise of the Affordable Connectivity Program (ACP).
However, some of those areas of discussion, including mobile and network expansions, aren't expected to help cable broadband turn the corner for a couple of years. Meanwhile, the ACP risk varies by operator, with Charter Communications by far the most exposed should the program end. But TD Cowen is using a loss of 6% to 8% of ACP subs as its placeholder model.
Return to cable broadband sub growth not expected until 2026
"Cable sentiment naturally remains at all-time lows as we don't expect Cable BB adds again until 2026," the analysts noted.
Related:US broadband customer growth stalls in Q1
Broken down by cable operators, TD Cowen expects Comcast and Charter Communications to lose 45,000 and 37,000 residential broadband subs, respectively. Altice USA is expected to shed about 26,000 broadband subs, as gains of about 45,000 fiber-to-the-premises (FTTP) customers won't be enough to offset a loss of about 71,000 hybrid fiber/coax (HFC) subs.
But not all cable operators will end Q1 in the red. TD Cowen expects privately held Cox Communications to add 10,000 broadband subs in Q1, with Cable One adding about 3,000. Rural-focused Cable One is part of the National Content & Technology Cooperative (NCTC), a group that recently noted that its members had combined broadband subscriber growth of about 4% in 2023.
The analysts at TD Cowen noted that the fixed wireless access (FWA) market is continuing to put pressure on the lower end of the residential broadband market. But rather than taking share directly from cable, FWA is winning more "jump balls" from the DSL segment, the analysts explained.
All told, TD Cowen sees the FWA market raking in about 630,000 residential subs in Q1. T-Mobile is expected to lead with a gain of about 320,000 consumer FWA subs, followed by Verizon (+230,000), AT&T (+75,000) and Starry (+5,000).
Related:Comcast turns to ARPU, not subs, as key broadband growth metric
But even FWA gains won't be enough to create a pretty picture for broadband in Q1 2024. TD Cowen expects total Internet subscriber adds to be down a record 22%, to +555,000, in the period.