Comcast will kick off the Q2 earnings season Thursday morning and while many eyes will be on whether the nation’s largest cable company will address rumors it is contemplating buying a smart TV manufacturer, more important to the industry will be how it measures up to broadband subscriber growth targets.
Reports surfaced Wednesday that Comcast has had talks with smart TV companies Vizio and TP Vision about possible acquisitions. While the seriousness of those talks is debatable, Protocol said discussions with Vizio were held in 2021 and in early 2022, but that it was "unclear how far the discussions with each company progressed, or whether they are still ongoing." Of more imminent importance will be whether the tone for the rest of the year concerning broadband growth will be better or worse.
Comcast’s results will come on the heels of somewhat mixed Q2 reports from top telco competitors AT&T, Verizon and T-Mobile. AT&T’s fiber broadband adds topped 316,000 in the period, one of its strongest showings ever but not enough to offset 341,000 IP broadband losses in the quarter. Verizon added 256,000 fixed wireless customers in Q2, but 36,000 additional Fios broadband customers missed analysts’ estimates.
T-Mobile, which earlier said it would shell out about $500 million -- $350 million directly to customers -- for a 2021 data breach, added 560,000 fixed wireless broadband customers in Q2, topping even the most optimistic estimates.
After several quarters of record subscriber growth during the pandemic, Comcast and the rest of the cable industry saw what was once the runaway high speed data train come to a near halt. After nearly 2 million additions in 2020, Comcast’s performance slowed in 2021 to 1.3 million additions. So far this year it managed to outpace consensus estimates for Q1, reporting 262,000 broadband additions for that period -- consensus was for around 230,000 additions. But most analysts expect growth to slow to a crawl in Q2 -- most have Comcast adding less than 100,000 high-speed data customers in the period, which would be its lowest quarterly broadband subscriber growth since Q2 2009.
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MoffettNathanson senior analyst Craig Moffett estimates that Comcast will add about 91,000 high-speed data subscribers in Q2, compared to 354,000 additions in the same period last year. Wells Fargo Securities media analyst Steven Cahall expects even more sluggish performance -- he predicted Comcast would add just 50,000 broadband customers in the period -- while Barclay’s media analyst Kannan Venkateshwar was slightly more optimistic, estimating the cable operator would add 74,000 broadband customers in the period.
Comcast isn’t alone. The analysts also have lowered expectations for the rest of the sector. For Charter Communications, which is due to report Q2 earnings on July 29, Moffett is most optimistic, estimating Q2 broadband additions will be 90,000, while Cahall predicts they will fall to 15,000 and Venkateshwar believes they will be flat for the period.
"We continue to expect Cable net adds to slow through 2022 (and beyond), driven primarily by an acceleration in fiber and fixed wireless growth," Cahall wrote in a July 25 report. "We've seen the composition of quarterly net add growth drastically shift over the past year, with fiber and fixed wireless expected to account for much of the growth in 2Q, offset by declining legacy Telco DSL subs and modest Cable additions."
At Altice USA, which according to some reports hired Goldman Sachs to shop its Suddenlink systems to the highest bidder, is scheduled to release Q2 results on August 3, Moffett expects the past trend of broadband losses to continue for the operator, estimating it will shed 9,000 broadband subscribers in the period. Cahall predicts Altice USA will lose 22,000 broadband customers, while Venkateshwar is close behind with an estimate of 20,000 in losses. ■
