Comcast’s Xfinity Mobile MVNO finally turns a profit

Comcast’s Xfinity Mobile MVNO business hit a key milestone in Q1 2021, turning a profit for the first time since its launch in the first half of 2017 as it posted its best quarterly net additions on record.

Revenue for the unit increased 49.7% year on year from $343 million to $513 million. It posted adjusted EBITDA (the company’s measure of profit) of $6 million, compared to a loss of $59 million in Q1 2020.

Wireless net additions of 278,000 marked the company’s highest quarterly result to date, and a significant increase from 216,000 in the year-ago period. Comcast ended the quarter with 3.1 million wireless lines, up year on year from 2.3 million.

Overall revenue for the Cable Communications division, of which the wireless unit is a part, increased nearly 6% to $15.8 billion. Consolidated revenue of $27.2 billion was up 2.2% year on year, while net income attributable to Comcast increased 55% to $3.3 billion.

In a note to investors, New Street Research analyst highlighted the strength of these results, stating “broadband and wireless adds beat expectations, and expectations were pretty high going in.”

During an earnings call, Comcast Cable CEO David Watson highlighted the company’s recent move to offer discounted multi-line unlimited plans as a chance to improve Xfinity Mobile’s value proposition.

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“It’s just a great addition to the portfolio,” he said, adding “it was important for us to accelerate. We think it’s good for broadband, it is helping broadband, we see the results in terms of churn. It’s just a growth engine for us, period.”

Despite the price cut for consumers, Watson expressed confidence the company could offer the plans without pushing Xfinity Mobile back into the red. He stated “we feel good about unlimited as a part of the portfolio and not changing the strategy or materially the results in terms of ARPU in mobile and the impact towards EBITDA.”

“It’s a long term growth opportunity,” he continued. “When you look at the overall marketplace, we feel good about that we’re a little over three million lines, less than two million customer relationships, mobile relationships, out of a pool of 33 million customer relationships. So low penetration, lots of runway.”

New Street Research analysts contended they “wouldn’t be surprised to see EBITDA dip negative if net adds surge” in response to the offer, but added “that would be a good thing.

“Importantly, the new pricing is good enough that they can offer much more aggressive unlimited plans without impacting profitability. We think the new plans will drive a strong acceleration,” they concluded.