Comcast broadband revenue jumps despite subscriber loss

Comcast lost 19,000 domestic broadband subscribers in its second quarter but surprisingly, its broadband business outperformed analysts' expectations. The company's domestic broadband revenue still managed to rise by 4% during the same period.

New Street Research anticipated a larger drop of between 60 and 80 thousand subscribers in Q2 of this year. This marks the second time Comcast has lost domestic broadband subscribers. In the fourth quarter of 2022, the company attributed a loss of 26,000 subscribers to temporary service disruptions caused by Hurricane Ian.

Comcast had warned earlier this year that it would likely continue struggling to add broadband subscribers in the near term. Executives have instead taken a strategic focus on revenue per broadband customer, prioritizing high-end subscribers.

A third of Comcast’s 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.

Comcast's domestic broadband segment saw a boost in average revenue per user (ARPU), rising by 4.5% in the second quarter, which helped offset the impact of subscriber decline.

“As we have said before, our goal is to protect ARPU by retaining the appropriate balance between rate and volume and to serve our customers constant demand for more from our network,” said CFO Jason Armstrong during the second-quarter earnings call.

"We continue to see the use cases for better and faster internet increase. Demand for higher speeds is increasing, as is average network consumption, and our customers are hanging more devices off our network in their homes.”

Armstrong said the average monthly data usage for a broadband customer that doesn't take video from Comcast is now nearly 700 gigabytes. That is nearly 70% more than the average usage from the same quarter in 2019.

Comcast's strengths outside of domestic broadband

Though the domestic broadband segment presents challenges, Comcast's growth in other areas remained strong.

In total, Comcast’s residential connectivity revenue grew by 8%, reflecting the 4% growth in domestic broadband, and more significantly, a 20% growth in wireless and 26% growth in international.

The company added 316,000 wireless lines in its second quarter, marking the 7th consecutive quarter of more than 300,000 line additions. Xfinity Mobile yielded $869 million in revenue, up 20.4% from a year earlier.

“With just 10% of our domestic residential broadband customers taking our mobile offering. We have a big opportunity and long runway ahead for growth in wireless,” Armstrong said.

Additionally, Armstrong noted that Comcast’s transition to DOCSIS 4.0 is “progressing well.”

The operator has previously stated it plans to be in the market with DOCSIS 4.0 by the second half of 2023. Last month, Comcast kicked off low latency DOCSIS field trials in partnership with Apple, Nvidia and Valve.

“We're more than halfway through the year and implemented our mid split technology for 25% of our footprint and are on target to complete one third of this build by year end, with the first commercial launch of DOCSIS 4.0 in just a few short months,” Armstrong said.

In the second quarter Comcast raked in $30.5 billion in revenue, up 1.7% from $30 billion in the same period last year.