Comcast’s Xfinity Mobile begins to accelerate, but analysts remain wary

Comcast reported a gain of an additional 204,000 Xfinity Mobile lines—the cable operator’s biggest quarterly customer addition figure since it launched its mobile services last year. Comcast reported around 180,000 mobile customer additions in the fourth quarter of last year, and around 196,000 in the first quarter of this year.

Comcast said its quarterly results include a loss of $185 million from Xfinity Mobile, and that its mobile business ended the period with a total of 781,000 customer lines.

Although the company's quarterly customer numbers continue to grow, at least one analyst sounded an alarm. "We estimate Comcast’s cumulative Cash EBITDA losses from its wireless business have topped $1.2 billion since the launch in May of last year, while subscriber growth has stagnated at 200,000 per quarter, below the pace that would enable the company to top the 1 million subscribers additions that investors expected in 2018," wrote BTIG analyst Walter Piecyk in a post. "Comcast’s subscriber growth once again fell well short of the 325,000 bogey we previously set as a level that would concern the wireless industry."

But Piecyk argued that Comcast will likely remain in the wireless industry for the foreseeable future in order to stand against threats posed by the pending launch of 5G.

Separately, Comcast reported the loss of 140,000 video customers.

Comcast’s Xfinity Mobile business also carries a number of caveats that make it difficult to compare to the nation’s existing wireless network providers. First, the company only reports the number of lines added, which doesn’t provide insight into how many actual households are subscribing to Xfinty Mobile service—since a household could purchase multiple lines of service.

Further, Comcast didn’t provide any information on the makeup of its Xfinity Mobile subscribers, such as how many signed up for its $45-per-month unlimited plan versus its by-the-gig pricing offering.

And Comcast only sells Xfinity Mobile to its existing wired internet and TV customers, which means that the company is pulling from a much smaller addressable base than the nation’s major wireless providers, which sell their services to anyone in the country.

Thus, Comcast’s performance in the mobile industry could be considered more impressive when compared with the quarterly results reported this week from AT&T and Verizon. AT&T, for instance, reported the loss of 49,000 postpaid customers, though that was offset by the operator’s gain of fully 356,000 prepaid customers. Verizon, meanwhile, lost 236,000 prepaid customers but added 531,000 new retail postpaid net customer additions, a figure that comprised 199,000 net phone customer additions.

Sprint and T-Mobile haven’t yet reported their second-quarter results.

And during the second quarter, Comcast was joined by fellow cable provider Charter in the mobile industry. At the end of the second quarter, Charter launched its own Spectrum Mobile MVNO, which features virtually identical services and pricing to Xfinity Mobile.

The entry of major cable providers into the wireless industry represents a new and potentially threatening dynamic to AT&T, Sprint, T-Mobile and other operators that are not Verizon (both Comcast and Charter use Verizon’s LTE network for their respective MVNOs).

Indeed, the Wall Street analysts at Morgan Stanley Research recently estimated that cable MVNOs will add around 2.2 million mobile phone customers in 2020, or almost 50% of the industry’s total net customer additions.

Article updated July 26 with additional commentary.