During its earnings call with investors today, Comcast’s management disclosed that the company’s Xfinity Mobile wireless service, an MVNO powered by Verizon’s network, counted 380,000 customer lines at the end of 2017—a notable achievement considering Comcast just launched the service in May and rolled it out to its full cable footprint in August.
That figure is up from the 250,000 customer lines Comcast reported in October.
“We like our game plan. We like the fact that it’s connected to our existing business line,” Dave Watson, Comcast’s CEO for its cable business, said this morning on the company’s quarterly conference call with investors. “It’s a really simple business plan that can scale. We’re finding that the by-the-gig approach is working. It’s early still—the branding is just kicking in, and we’re expanding distribution to our existing retail locations. We’re well positioned going into 2018 with mobile.”
Meanwhile, Comcast CFO Mike Cavanaugh said it will be “several years” before Comcast breaks out mobile on its financials. Click here for details on Comcast's fourth quarter results.
In its fourth-quarter report, Comcast tallied its Xfinity Mobile business in its “Corporate, Other and Eliminations” section, in which it said it lost $538 million. That figure reflects “$171 million of expense related to a special employee bonus, as well as increased costs associated with scaling Xfinity Mobile, compared to a loss of $196 million in the fourth quarter of 2016,” the company said.
Although Comcast's management expressed optimism over the company's Xfinity Mobile numbers, some analysts argued they were below expectations.
"Comcast reported about 180k Wireless net adds in 4Q17, which is roughly consistent with last quarter and below the 250k or more that we were expecting," wrote the analysts at New Street Research in a note to investors issued this morning. "The lack of acceleration will delay the Wireless becoming a meaningful part of the Cable story and it will ease concerns of mounting competition in Wireless this year (neutral for Cable; positive for Wireless)."
Continued the New Street analysts: "Our 2018 net add estimate of 1.6MM may look a tad ambitious based on the 4Q17 result, but let’s see what they report in 1Q18."
Comcast has been working to flesh out its Xfinity Mobile service. For example, the company this month announced that its service can now support customers’ existing, compatible phones through a bring-your-own-device (BYOD) scenario. In fact, that offering led Deutsche Bank Research analysts to warn that such promotions “increase the risk of churn at bigger incumbents (Verizon in particular).”
But Comcast may owe much of its Xfinity Mobile progress in the fourth quarter to its iPhone X promotion—which was arguably more aggressive than any provided by the nation’s four leading nationwide wireless network operators during the period. As Matthew Niknam of Deutsche Bank Markets Research observed in a research note in October, Xfinity Mobile offered a $500 gift card through Dec. 3 to new customers who sign on to its “triple play” of TV, internet and mobile, and customers could apply that savings toward the purchase of an iPhone X.
“Comcast’s focus on the bundle represents more risk for AT&T, in our view,” Niknam wrote at the time. “AT&T’s focus on bundling has been key to retaining share, whether in video, wireless or broadband. While there’s been much discussion around a more active AT&T in recent weeks (potentially weighing on cable video trends), we think Comcast’s $500 gift card for new triple-play customers represents an incremental risk for AT&T given its national video platform, with lack of broadband bundling opportunity outside its 21-state ILEC (incumbent local exchange carrier) footprint.”