Comcast, Charter and Altice all reported increased broadband adds during their first quarter 2020. Duh! With so many more people in the United States working and learning from home due to the coronavirus, it’s been well-reported that the broadband pipe has gained new-found status.
The companies also saw increases in their mobile virtual network operator (MVNO) subscriptions during the quarter.
Comcast added 216,000 new wireless lines, bringing its total to 2.3 million lines. And its wireless revenue increased 52% to $343 million.
Analysts at Cowen, led by Gregory Williams, said the business is scaling impressively, and it’s a shame that COVID-19 will drive lower volumes in the second quarter at a time when the mobile business is approaching the critical subscriber mass of 3-3.5 million to break-even.
LightShed Partners analysts Walter Piecyk and Joe Galone predict that Xfinity Mobile’s break-even point of 3 million subscribers won’t happen until Q1 of 2021. “We believe Verizon and AT&T are Comcast’s primary source of gross additions,” wrote the LightShed analysts in a blog. “We estimate Comcast grew gross adds by more than 25% in Q1 compared to slight growth at AT&T and a slight contraction at Verizon.”
On Comcast's earnings call, Dave Watson, CEO of Comcast Cable, reiterated the company’s stance that it “likes” its current MVNO relationship with Verizon. Watson said, “We continue to be real pleased with the trajectory of the wireless business. And in regards to spectrum…. we will be opportunistic if it makes sense to our business.”
The Cowen analysts said, “We could see Comcast pitting the three carriers against each other for a better wholesale deal (our model shows Comcast already getting a solid competitive rate at about $2.50/GB/month).”
Comcast is also expected to bid in July’s CBRS auction, especially in dense markets where it could build some of its own wireless infrastructure and offload some of its MVNO traffic from Verizon’s network. The Cowen analysts predict heavy CBRS bidding by Comcast for areas in New York City, Philadelphia, San Francisco, Washington, D.C., Boston and Chicago. “If Comcast builds out alone, we believe a network sharing deal with Charter is likely given the industrial logic,” said the Cowen analysts.
Altice and Charter
Altice Mobile added 41,000 new lines in Q1 2020, generating revenue of $18 million for the quarter. It now has about 110,000 mobile lines since its commercial launch in September 2019.
The Cowen analysts said Altice Mobile’s adds of 41,000 lines was lower than its estimates of 65,000, “clearly impacted by the promo removal and shutdown of retail stores.”
Charter added 290,000 Spectrum Mobile lines in the first quarter, and as of March 31, 2020, Charter served a total of 1.4 million mobile lines. In Q1 2020, Spectrum Mobile also launched 5G service. Customers with a $45/monthly unlimited data plan can use 5G phones to access 5G service at no additional cost in select cities nationwide.
Broadband is proving to be a defensive business during COVID-19, and the “dumb pipe” is getting its revenge.
Comcast posted record broadband adds of 477,000 subscribers, the highest adds in 12 years and especially impressive considering the COVID-19 impacts only hit during the last few weeks of the quarter.
Altice USA notched its best ever quarter for broadband subscribers, adding 50,000 broadband subs as well as an additional 9,000 subscribers for its Altice Advantage tier, a low-income family broadband program.
Charter added 582,000 total residential and SMB internet customers in the first quarter 2020.
Interestingly, the company said as part of its pledge to the FCC to keep Americans connected during COVID, about 140,000 residential customers had requested protection from disconnection. At the end of April, 36,000 of those 140,000 customers' outstanding balance is now fully current, and in total nearly 50% have made partial or full payments since entering disconnection protection. However, 67,000 of those 140,000 customers now have past due balances beyond the point of normal disconnection.
The executives from all three cable companies predict that their new broadband subscribers will stay now that they see how important their wired internet connection is.
Altice’s CEO Dexter Goei said, “I do think we are going to see a continued slowdown in churn numbers, as people know what they have…. Even if they are in semi-lockdown for the next six months, I don’t see people voluntarily changing providers, nor do I see an acceleration in movers. And so, I do think that we are going to see very, very strong numbers coming out this year."