In what appeared to be a first for the company, Comcast failed to add any broadband subscribers in its most recent quarter. Executives attributed the result to lower connection activity, competition from fiber and fixed wireless access services and the resurgence of mobile substitution for internet access. Despite this, the operator managed to grow broadband revenue 6.8% in Q2 2022.
On an earnings call, Comcast CEO Brian Roberts said the largest impact on subscriber growth was from lower move activity, which left the operator with fewer opportunities to win new business. However, he also noted customers are increasingly returning to pre-pandemic behaviors, including using mobile service as a substitute for fixed broadband. Additionally, he acknowledged the operator was up against increased competition from fiber and fixed wireless access, though argued the latter was a short-term and limited threat.
His comments came after wireless player T-Mobile posted 560,000 fixed wireless net additions for Q2, while Verizon put up 256,000.
Dave Watson, CEO of Comcast’s Cable division, said that as the newest competitor in the market fixed wireless is going through “a launch phase that typically adds pressure and we’re seeing that on the front end. As Brian said, it’s impacting connects. We do not see it in churn.” That trend is different from what it saw years ago when fiber came into play and impacted churn, he said.
CFO Mike Cavanagh warned the trends seen in Q2 have largely continued into the early part of Q3. For the quarter to date, it has lost 30,000 customers, but Cavanagh said Comcast is optimistic momentum from the back-to-school season will help boost connect activity in August and September.
As it works to return to broadband growth, Roberts said Comcast will take advantage of housing growth in its existing markets and pursue edge outs in new markets. Analysts at MoffettNathanson noted Comcast already added 226,000 homes passed in Q2, up from 160,000 in Q2 2021. They tipped that 1.4% growth rate to “climb towards 2% annually given Comcast’s renewed focus on edge-outs.”
MoffettNathanson’s team noted Comcast’s expansion and broadband subscriber growth could be helped by broadband grants it recently secured. Already this year Comcast has won awards of $33.1 million in Delaware; $17.44 million in Maryland; and $7.88 million in Louisiana.
“None of these grants are individually large enough to move the needle, but collectively, they represent a potentially meaningful source of future broadband subscriber growth,” they concluded.
Metrics
Consolidated revenue rose 5.1% year on year to $30 billion, while net income attributable to Comcast fell 9.2% to $3.4 billion. Cable segment revenue rose 3.7% to $16.6 billion, helped by a 6.8% jump in broadband revenue to $6.1 billion, a 10.1% increase in business service revenue to $2.4 billion and wireless revenue which grew 29.8% to $722 million.
Flat broadband net additions were down from 354,000 in Q2 2021.