Comcast adds 5K broadband subs in Q1 but warns rocky road ahead

Comcast eeked out a positive internet net addition result in Q1 2023 despite dire analyst predictions, but executives warned the quarter isn’t necessarily an indicator of how the rest of the year will pan out. The company expects to continue struggling to add broadband subscribers in the near term, but executives pointed to residential footprint expansion and the business segment as key opportunities for growth.

Consolidated revenue of $29.7 billion was down 4.3% year on year, though net income attributable to Comcast rose 8% to $3.8 billion. Broadband revenue of $6.3 billion increased 4.8%. The operator added 5,000 broadband customers in the quarter, which was a sharp decline from 264,000 in the year-ago period.

During an earnings call, executives noted Comcast’s broadband results were helped by a promotion for low-end customers, which offered standalone internet service for $25 per month or internet plus wireless for $50 per month. While Comcast Cable CEO Dave Watson insisted the company hasn’t seen any material spikes in competition overall, he acknowledged the offer did help Comcast fend off some activity it saw from fixed wireless competitors.

That said, he noted Comcast remains focused on serving high-end subscribers as well given a third of customers take its 1 gig product and nearly 75% take speeds of 400 Mbps or higher. Already, the operator has upgraded 20% of its footprint with multi-gig speeds and expects to reach 30% by the end of the year, he said.

Comcast also plans to begin testing DOCSIS 4.0 toward the end of 2023 and Watson said “I think next year will be a pretty big year for that.” It was not immediately clear whether Comcast’s DOCSIS 4.0 timeline has changed. Executives previously stated the operator planned to be in the market with DOCSIS 4.0 in the second half of 2023, but Comcast did not immediately respond to Fierce's request for clarification.

Edward Jones Analyst Dave Heger told Fierce investors were by and large expecting a loss of broadband subs in Q1, so will likely be pleased with Comcast’s positive result despite the year-on-year drop.

“The expectation of seeing them add a couple hundred thousand subs in a quarter is behind us,” he said. “[But] I think investors will respond more favorably if Comcast can continue to show even some level of broadband additions."

Speaking about the promo, he added “It may be some recognition that to show growth or to be close to growth they need to have a lower-end offering that needs to be close to fixed wireless.”

Comcast President Michael Cavanagh noted that the competitive environment remains tough to the point that “adding subs in the near term is likely to be a challenge.” That includes in Q2, when broadband net additions are expected to be back in the red. But he added “I fully expect we will eventually return to subscriber growth” over the long term, in part as a result of its network upgrade and expansion efforts.

Operator executives reiterated plans to reach 1 million new locations this year – a 20% increase from 2022 – and hinted Comcast’s annual target could even go beyond that over time.

Business segment a boon

Residential broadband aside, Cavanagh said Comcast sees a significant growth opportunity in the business segment. Already, that division is nearing $10 billion in annual revenue, having grown 5.2% to $2.3 billion in Q1. Cavanagh said Comcast already has 2.5 million enterprise customers and sees a $50 billion market opportunity there within its footprint. By leveraging its technology and partner ecosystem out of footprint, Cavanagh said the market opportunity could be as great as $70 billion to $100 billion in total.

Heger tipped the investments Comcast is making in its network to benefit not just its residential customers but the operator's business segment as well. That’s key because – at least for the time being – it “looks like growth from that will be potentially faster than the residential broadband.”