- Comcast lost 226,000 broadband subs but says its new pricing play is working
- It sees “strong traction” in enterprise wireless due to the T-Mobile MVNO
- The company danced around the question of M&A
Comcast followed fellow cableco Charter in posting poor broadband subscriber results in the second quarter. The good news is it’s seeing light at the end of the tunnel due to its newly implemented pricing play, executives said on today’s call.
Following the introduction of new pricing models in April, Comcast saw “roughly half” of eligible customers take the five-year guarantee plan, said CFO Jason Armstrong. The five-year price lock comes with a few bells and whistles, notably unlimited data and no contract.
Despite losing 226,000 broadband subs in the quarter, “we are encouraged by the early reaction to our new go-to-market initiatives, as we started to see some early signs of stabilization in both connect activity and voluntary churn,” Armstrong added.
Comcast’s earnings came shortly after fellow cable giant Charter reported dismal broadband losses of 117,000. Comcast on the other hand did better than analysts expected.
“It is clear their new offers are clearly having some modest positive impact vs. expectations,” said BNP Paribas analyst Sam McHugh in a note. In addition to pricing guarantees, Comcast has rolled out new internet plans for four speed tiers – essentially following Charter’s footsteps.
But McHugh noted Comcast isn’t out of the woods yet.
“Given Comcast are largely aping Charter’s strategy, we think the market is unlikely to give Comcast the full benefit of the doubt on the wider thesis of cable’s structural challenges, especially since the cost of this turnaround won’t be fully known until we begin to see the impact on ARPU growth,” he said.
New Street Research analysts similarly said Comcast is still treading rough waters due to competition from fiber and fixed wireless. Furthermore, market growth “is likely to slow in 2026 and beyond due to slowing immigration,” they wrote.
How Comcast thinks about wireless
Comcast in Q2 added 379,000 mobile lines and it is looking to gain even more wireless traction from its mobile virtual network operator (MVNO) partnership with T-Mobile and Charter.
The MVNO contract, which will allow Charter and Comcast to offer business wireless service on T-Mobile’s network, presents a prime opportunity to go after medium and large enterprises, said Comcast Chairman and CEO Brian Roberts.
“We see strong traction with larger enterprises,” he said, noting the T-Mo deal will let Comcast win more market share “in ways we haven’t been able to offer before.”
Both Charter and Comcast will still use Verizon’s network to provide consumer wireless service. NSR analysts have speculated losing the business MVNO deal to T-Mobile might cost Verizon its existing contract with the cable operator, but Roberts stressed Comcast’s relationship with Verizon is “really important.”
Comcast further bolstered its business strategy in the quarter by closing its acquisition of managed services provider Nitel, a company that serves mid-size enterprise clients across areas such as finance, healthcare and education.
Comcast talks M&A
Telecom M&A and consolidation are in full force, as new deals seem to be getting announced every month. Given Charter plans to acquire Cox for $34.5 billion, analysts on the call wondered if Comcast is eyeing a similar pick-up.
Without being too descriptive, Comcast President Mike Cavanaugh suggested some kind of M&A could be on the table for the right price.
“We said before and continue to say that the bar is really high…we have plenty of opportunity by running what we have really well and making gross investments, either directly in businesses or in kind of acquisition capabilities in places like business services, as you’ve seen us do,” he said.