Comcast has a problem: it’s not getting many new broadband customers. But Comcast also has a solution: get more money from existing subscribers.
Comcast did not add broadband customers in the second quarter of 2022, holding at 32,163,000 combined home and business Internet customers. In its third-quarter earnings report released yesterday, Comcast said it only gained 14,000 broadband users in the last quarter. Comcast also lost 561,000 video customers and 316,000 VoIP phone customers.
That’s why Comcast executives focused on ARPU (average revenue per user) during an earnings call yesterday. With new customers few and far between, Comcast is aiming for growth in the average amount paid by each existing customer.
“We expect ARPU growth to continue to be the primary driver of our residential broadband revenue growth in the near term,” said Comcast President and Chief Financial Officer Michael Cavanagh.
Comcast could attract more customers by expanding into new territories or connecting homes in neighborhoods where some people are stranded without broadband, even if their neighbors have Comcast Internet service. But Comcast seems content to stick to its current territory and often refuses to provide new connections unless owners pay tens of thousands of dollars upfront, or even $210,000, as described in one of our recent stories.
The CEO does not expect strong growth in the number of subscribers
Comcast CEO Brian Roberts said the nation’s largest cable company is “still in a challenging environment in terms of depressed moving activity and increased competition from new entrants.” Robert said there are four main growth drivers in Comcast’s cable division: “residential broadband units, residential broadband ARPU, wireless, and business services.”
“While we don’t expect residential broadband units to be a significant driver at this time, we expect to maintain healthy growth in the other three, leading to continued strong financial performance from cable for the foreseeable future,” he said. said Roberts. Cavanagh said that “Broadband revenues increased by 5.7% driven by ARPU and customer growth compared to last year. Broadband ARPU increased by 3.7% year-over-year, which is in line with the second quarter growth rate.”
Comcast also discussed ARPU growth in its earnings call three months ago, suggesting price increases helped lift revenue per user in the second quarter. “In broadband alone, we had really healthy ARPU growth of 3.6%, half based on pricing, the other half on how we manage the level mix,” Comcast’s cable division CEO David Watson said at the time.
Meanwhile, Roberts pointed out yesterday that Comcast “returns a substantial amount of capital to our shareholders. We pay nearly $5 billion in dividends a year and have repurchased $9.5 billion of our stock since the start of the year until the third quarter.”
Broadband revenues were $6.135 billion during the three-month period. This works out to around $63.55 per month per subscriber, but includes both business and home accounts. Broadband revenues for the third quarter of 2022 are up from $6.107 billion in the second quarter of 2022 and $5.8 billion since the third quarter of 2021.
Comcast has several ways to get more money from existing subscribers. This includes the sale of mobile plans – Comcast added 333,000 wireless lines during the quarter, reaching 4.95 million total wireless lines. Wireless revenues increased 30.8% to $789 million. Comcast also sells home security services.
But Roberts and Cavanagh’s statements referred specifically to “broadband ARPU”, suggesting that they want to keep increasing broadband bills. This could include base monthly rate increases, fee increases that raise the cost above advertised prices, or requiring subscribers to purchase the xFi Complete add-on at $25 per month in order to get unlimited data and faster download speeds.
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