Back in May, Cable One indicated it wasn’t seeing fiber competition from AT&T or Lumen Technologies. But it seems the competitive landscape was a bit tougher in Q4 2022, with the operator reporting a sequential loss of 1,700 residential broadband subscribers.
During an earnings call, CEO Julie Laulis rattled off some of the usual suspects connected with lackluster broadband additions. Fewer homes were built. People stopped moving at a breakneck pace. However, she also reflected on other factors that led the operator to fall short.
“We are missing connects. As you know, moves and household starts are lower, but we have to have a conversation as well about what's going on with competition,” she stated.
On that front, she noted unlimited fixed wireless is available in less than 35 percent of Cable One’s footprint. Fiber has popped up in 25 percent. And signs are now pointing to the fact that the competition is taking a bite of Cable One’s connects.
“I assume that some of these have gone to a competitor,” she said, noting that a small portion may have gone to T-Mobile. “So, our job, quite honestly, is to get connects, but not at any price, not at any cost…What you will see is measured responses because we test before we implement. That might make us a little bit slower, but we’re being more surgical and prudent.”
Despite the sub slide, ARPU proved to be a bright spot, rising 3% to $81.71, driven by speed tier step ups. In Q4, more than half of all new Cable One customers opted for service tiers of 500 megabits or higher. A third of new customers selected gig speeds.
When asked if maximizing ARPU is on the table for residential customers to make up for economic slow-downs, Laulis was hesitant. “Our ambition is to be the most trusted broadband provider and we’re not going to abuse that trust with errant price hikes. If we can add value to drive ARPU, you bet ya. But ideally, it will be a balanced approach.”
Financials
Consolidated revenue fell 1.6% year on year in Q4 to $425.5 million. And the operator swung from $64.8 million in net income last year to a loss of $77.2 million. CFO Todd Koetje attributed this to a $128.8 million non-cash loss on the revaluation of its MBI options, along with a one-time $22.9 million deferred income tax expense.