Comcast, Charter See National Wireless Opportunities, Charter's Rutledge Says
Comcast and Charter Communications see "national level" wireless opportunities they wouldn't have alone as regional players, Charter CEO Tom Rutledge said in an earnings call Thursday. He said Charter's wireless partnership with Comcast (see 1705080046) comes as the two have the same Verizon mobile virtual network operator: "It makes sense for us ... to be efficient and to know how that MVNO works and to have a good relationship with Verizon."
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Also Thursday, Comcast CEO Brian Roberts indicated the company isn't pursuing any major mergers and acquisitions involving its wireless offering. "We're not missing anything," he said, saying the company likes its Verizon MVNO strategy for its Xfinity Mobile service launched in Q2. Roberts said more customers are opting for the by-the-gigabyte data option than unlimited.
Comcast and Charter combined lost 135,000 residential video customers in Q2, Thursday's reports show (see here and here). Some analysts predicted big MVPD subscriber drops this quarter in part from increasing growth of over-the-top competitors. But NBCUniversal CEO Steve Burke in an earnings call said virtual MVPD services are "off to a relatively slow start," unlikely to be a large or profitable business.
Comcast plans to roll out its set-top box-less Instant TV offering in Q3, Comcast Cable CEO Dave Watson said. He said Comcast has been testing it in some markets and it will be a targeted offering for certain demographics like millennials. Rutledge also said Charter is testing "5G-like services" in field tests starting earlier this month.
Charter's video subscriber losses in its legacy Time Warner Cable territories were half of what had been expected, bearing out Charter's assertions it had turned the corner with TWC integration and churn, New Street Research analyst Jonathan Chaplin wrote investors. Pivotal Research Group's Jeffrey Wlodarczak said if AT&T's buy of Time Warner gets regulatory approval, Comcast must consider making a bid for Charter, and if it doesn't, Altice likely will. He said Roberts' comments reinforce the idea Comcast and Charter likely won't make a joint bid for Verizon, though those unlikely odds could change if a Sprint/T-Mobile moves forward.
For Comcast, Q2 revenue was $21.2 billion, up 9.8 percent. It lost 45,000 residential video customers in the quarter, ending the quarter with 21.5 million, but gained 140,000 residential broadband customers, ending with 23.4 million. It lost 50,000 residential voice customers, ending at 10.5 million. For Charter, Q2 sales were $10.4 billion, up 3.9 percent on a pro forma basis. Charter said residential video customers decreased by 90,000, to 16.6 million, but it added 231,000 residential Internet customers, to 22 million, and 14,000 residential voice customers, to 10.4 million. Charter closed at $366.90, up 5.2 percent.