Comcast Broadband Growth Slowed in Q2, but Company Sees It Recovering
Between fewer people moving and increased fixed wireless competition, Comcast saw its residential broadband subscriber numbers flatline between Q1 and Q2. CEO Brian Roberts said it expects that to be temporary and residential broadband growth to resume as the company looks to housing and business growth in its current footprint and accelerated edge-outs into new areas, driven by government digital divide spending. Comcast shares took a body blow Thursday, closing 9.1% lower at $39.41.
Comcast said it ended Q2 with 29.8 million residential broadband customers. That was up from the 29.1 million it had at the end of Q2 2021. In a call with analysts, Roberts said broadband additions flow from churn and new connects. He said while churn is particularly low, so too is connection activity as there has been a slowdown in people moving. He said moving activity in Comcast's footprint was the lowest it has been since the COVID-19 pandemic began.
Less moving activity means "fewer of these jump balls" where it can acquire new customers, said Roberts. Also hitting Comcast is some mobile substitution for residential broadband and increased competition, particularly from fixed wireless. He said wireless networks at least for now have excess capacity that they are targeting at some customer segments. Fixed wireless so far isn't affecting churn, he said. Roberts said fixed wireless additions seem to skew more among small businesses and rural households.
Mobile substitution "will eventually stabilize" and fixed wireless "has inherent performance and capacity limitations" that should cap its penetration, Roberts said. He said the company's longer-term DOCSIS 4.0 efforts toward multi-gigabit speeds also should give it competitive juice in residential broadband, he said.
Comcast will "be aggressive' in how it packages its mobile service with other services, but it won't get into a mobile price war, Comcast Cable CEO Dave Watson said. "What we won't do is chase pricing down to the bottom ... chase discounting," he said.
The slowed broadband growth looks to be from slow growth in new household formation and saturation more than losing market share to fiber and fixed wireless, MoffettNthanson's Craig Moffett wrote investors. Masa Capital seemed dubious of Comcast broadband competition claims: "No competition from 5G and fiber though," it tweeted next to a winking face emoji.
Peacock paid subscribers were flat at 13 million after a strong Q1 that included Super Bowl and Olympics coverage, Comcast said. It said revenues for the quarter were $30 billion, up 5.1% year over year. Q2 ended with 16.5 million residential video customers, down from 18.2 million year over year, and 8.5 million residential voice customers, down from 9.4 million. It ended the quarter with 4.6 million wireless lines, up from 3.4 million the same quarter a year ago.