Comcast has attempted to divert investors’ attention away from residential broadband net expansions. The market reaction to the company’s third-quarter earnings indicates that this strategy isn’t working.
- IMPORTANT NOTES
- Comcast lost 18,000 broadband users in the third quarter and predicted that growth would not resume in the fourth.
- Comcast’s stock dropped on Thursday morning.
- Investors shrugged off Comcast’s cellular expansion and NBCUniversal’s amusement park profits, according to Peacock.
Comcast shares tumbled more than 6% in early trading Thursday after the firm announced a loss of 18,000 residential internet users in the third quarter and warned that losses would be greater in the fourth. Rising loan rates have hindered home purchasing and selling, resulting in a decrease in new home internet connections. Mortgage demand has dropped to its lowest level in over 30 years. Last week, the 30-year fixed mortgage rate reached 8% for the first time since 2000. Furthermore, increasing competition for home internet from wireless carriers such as T-Mobile and Verizon has contributed to Comcast’s lack of residential growth.
Comcast’s lack of broadband expansion began last year, when the largest US internet provider announced no additions for the first time in the company’s history in the second quarter of 2022. It has reported net broadband losses in three of the last five quarters since then. It’s officials have urged investors to focus on rising average revenue per user (ARPU) growth in broadband, which is being driven by price increases rather than net additions.
In the third quarter, It’s residential broadband ARPU increased 3.9%.”As we continue to manage this balance, we expect ARPU growth to remain strong and our primary driver of broadband revenue growth, with slightly higher subscribers losses expected in the fourth quarter compared to the 18,000 loss we just reported in the third quarter,” Comcast Chief Financial Officer Jason Armstrong said during the company’s earnings conference call Thursday.
NBCUniversal shrugs
Comcast also owns NBCUniversal, which is rumored to be valued at tens of billions of dollars. Theme park income increased by more than 17% in the quarter, while streaming service Peacock attracted 4 million customers, reversing losses from the previous year. However, investors ignored such figures in favor of the company’s prediction that broadband growth would not resume in the coming quarter.
It restated its plans to return to broadband growth in the future on Thursday but provided no precise date. While a difficult housing market is a clear impediment to internet growth, T-Mobile attracted 557,000 new high-speed broadband users in the third quarter. Verizon reported 434,000 net additions. That points to It’s decision not to compete on price with cellphone providers.
“It’s a pretty competitive environment,” said President Dave Watson during the company’s earnings call on Thursday. “We’ve seen the footprints of fiber and fixed wireless expand. Part of our game plan is to continue investing in a better network and competing fiercely while maintaining financial discipline. That entails making specific considerations regarding pace and volume balancing.”
It attracted 294,000 wireless subscribers in the third quarter as it battled telecom provider competition by stealing some of their customers. Nonetheless, residential broadband has a far greater profit margin and generates far more money for them. It reported $6.4 billion in broadband revenue from 32.3 million users in the quarter, or nearly $200 per subscriber. Comcast reported $917 million in sales from its 6.3 million cellphone customers—$145 in revenue per subscriber for the quarter.
What is Comcast?
Comcast Corporation is the largest American global telecommunications and media corporation, based in Philadelphia.
What does Comcast do?
It is the world’s second-largest broadcasting and cable television company by revenue, as well as the largest residential Internet service provider in the United States. The Xfinity brand, launched in 2010 to replace the Comcast name, is used to market the company’s consumer cable TV, Internet, phone, and wireless services.
Is Comcast cable or internet?
Yes, it owns Xfinity, which debuted in 2010. It’s Xfinity brand provides internet, TV, home security, and phone services.
Click here to learn about Comcast.
Image source: google
