Comcast expects steep video losses to continue in a second quarter marked by the pandemic, but likewise believes it still has plenty of headroom left to expand its broadband base and its core "connectivity" business.
That's the general situation at the cable unit, according to Comcast CFO Mike Cavanaugh, who provided an update during a Credit Suisse conference that was hosted online.
In Q1 2020, a period partly impacted by the pandemic, Comcast raked in a massive total of 470,000 broadband customers (including 466,000 on the residential side). But it also suffered sizable video sub losses of 409,000, a big jump from a loss of 121,000 subs a year earlier.
Cavanagh noted that Comcast's video business was also impacted by a price increase in Q1. But he said the MSO still expects to see similar losses in Q2 even as it keeps playing up the value of a bundle that links together pay-TV and broadband connections that can access a broad array of streaming services. At the same time, Comcast is also continuing to push Xfinity Flex, a video streaming/smart home service that's being offered for no added cost to broadband-only customers.
"We're not wedded to being necessarily the seller of a bundle to you in video, but we would very much, if you appreciate either one of our alternatives, a bundle with X1 or a platform approach for video navigation aggregation through Flex," Cavanaugh said. "But we're not going to subsidize … broadband profitability."
He's also confident that Comcast's broadband business can continue to expand, as only about 49% of the homes in its cable footprint currently get that product. "I think we expect that there is plenty of headroom for continued growth," he said, noting that about 85% of the homes on Comcast's broadband service get speeds of 100 Mbit/s or more.
Comcast does expect growth to slow down on the commercial services front as small and midsized business grapple with the pandemic and stay-at-home orders. Although that piece of Comcast's business has been growing revenues in the high single-digit to double-digit percentage range in recent years, the pace is expected to drop down to the single-digit mark in Q2, Cavanaugh said.
"So, no surprise there," he said. "If you're operating a site that has to remain closed because social distancing doesn't allow it to open, there's no green shoots there until meaningful opening … become possible across a big base."
However, other commercial customers are leaning more heavily on digital orderings and transforming their businesses in a remote and digital way. "So, it's a bifurcated story," Cavanaugh said.
On the wireless/mobile side, he said Comcast remains happy with its MVNO deal with Verizon and how it weaves into the company's core connectivity business and strategy. He also reiterated that Comcast won't need to own a network to achieve its financial goals in the wireless/mobile arena.
Notably, Comcast is not among the entities that have registered to bid in the coming FCC 3.5GHz CBRS spectrum auction. Comcast has been testing unlicensed spectrum in the shared CBRS band. Generally, the cable industry's interest in CBRS spectrum centers on offloading MVNO costs, supporting private LTE networks and providing services on fixed wireless to adjacent areas not reached by wireline networks.
- Verizon, AT&T, Charter, Cox, Dish among CBRS auction bidders
- The full list: Here are the actual bidders in the CBRS auction
- Comcast Business tailors new offering for home workers
- Comcast 'Flex' device deployments hit 1M, cable CEO says
- Comcast sees broadband and mobile gains but greater video pain in Q1
— Jeff Baumgartner, Senior Editor, Light Reading