- Comcast sees promise in new wireless and pricing strategy as broadband losses steepen
- It’s already seeing momentum in mobile growth
- But broadband/mobile bundles may hinder ARPU, analysts warn
Comcast’s ailing broadband business didn’t get any better in the first quarter, but the operator reassured investors its revamped wireless and pricing strategies can salvage its sinking ship – eventually.
It’s too soon to predict the ultimate impact Comcast’s new five-year price lock and Xfinity Mobile plan will have on subscriber growth. Comcast President Mike Cavanaugh said it will take “several quarters” before the company’s “refreshed” market approach gains traction.
Still, he noted the potential to grow the wireless base is high, particularly among Comcast’s broadband-only crowd. Customers who sign up for the five-year price guarantee also have the option to get a free mobile line for the first year.
“With mobile penetration in only 13% of our residential broadband customer base, we have plenty of runway ahead to leverage wireless as a key component of our connectivity bundle with our industry-leading broadband product,” said Cavanaugh on the company’s earnings call.
When it comes to a broadband turnaround, Comcast has substantial work to do. The operator in Q1 lost a whopping 199,000 broadband subscribers, way worse than analysts expected.
“As the market has slowed, FWA and fiber trends have been steady, and Cable has borne the brunt,” said New Street Research analysts in a note today. According to the firm, cable net adds are poised to further slump in the next few years if U.S. immigration slows down.
Comcast tried to soften the broadband blow by pointing out the quarter saw its highest increase in wireless net additions in two years. The operator reeled in 323,000 new mobile lines, bringing its total wireless base to 8.1 million.
Analysts have high hopes Comcast’s updated pricing model can push cable in a more positive direction, but it may come at the cost of average revenue per user (ARPU).
New Street tipped Comcast ARPU growth will slow this year due to broadband and mobile bundling. Dell’Oro’s Jeff Heynen similarly predicted operators will face ARPU pains as they “undoubtedly accelerate” their bundling strategies in the wake of tariff concerns.
Tariffs
You can’t go far these days without hearing about the T-Word. Comcast, like AT&T and Verizon, was asked whether the potential cost of tariffs on devices will be passed onto customers.
While AT&T and Verizon’s answer was yes, Comcast Cable CEO Dave Watson offered less concise thoughts on the topic, noting instead Comcast is well-positioned as a “challenger” in the wireless market and that “we want to be where the customer is.”
“When it comes to macroeconomic and other issues, we have figured it out. Whether it’s competitive intensity, we think we’ll manage through it,” he said. “We have good offers on devices, we’ll see how things go.”
As of press time, Comcast’s shares (NASDAQ: CMCSA) were down 4.4% today at $32.96.