Signage is displayed within the window of a Comcast Corp. Xfinity store in King Of Prussia, Pennsylvania.
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Comcast has tried to maneuver investors away from specializing in residential broadband net additions. The market response to the corporate’s third quarter results suggests that may not working.
Comcast shares fell greater than 8% Thursday after the corporate reported a lack of 18,000 residential broadband customers within the third quarter and warned losses will likely be larger within the fourth quarter.
Rising rates of interest have slowed the buying and selling of homes, which has led to a decline in latest home web connections. Mortgage demand is at its lowest point in nearly 30 years. The 30-year fixed mortgage rate hit 8% last week for the primary time since 2000. Moreover, latest competition for home broadband from wireless providers akin to T-Mobile and Verizon had added to Comcast’s lack of residential growth.
Comcast’s lack of broadband growth began last yr, when the most important U.S. web provider reported no additions within the second quarter of 2022 for the primary time in the corporate’s history. Since then, Comcast has reported net broadband losses in three of the last five quarters.
Comcast executives have pushed investors to deal with broadband’s rising average revenue per user (ARPU) growth, driven by price increases and upselling packages, slightly than net additions. Comcast’s residential broadband ARPU rose 3.9% within the quarter.
“As we proceed to administer this balance, we expect ARPU growth to stay strong and our primary driver of broadband revenue growth with somewhat higher subscribers losses expected the fourth quarter
in comparison with the 18,000 loss we just reported within the third quarter,” Comcast Chief Financial Officer Jason Armstrong said through the company’s earnings conference call Thursday.
Shrugs for NBCUniversal
Comcast also owns NBCUniversal, an organization ostensibly price tens of billions. Theme park revenue rose greater than 17% within the quarter, and streaming service Peacock added 4 million subscribers within the quarter, stemming losses from a yr ago.
But investors shrugged at those results and focused on the corporate’s guidance that broadband growth won’t return next quarter.
Comcast on Thursday reiterated it plans to return to broadband growth eventually, while not offering a selected timeline. While a rough housing market is a transparent headwind on broadband additions, T-Mobile added 557,000 latest high-speed broadband customers in its third quarter. Verizon reported net additions of 434,000. That speaks to Comcast’s decision not to interact in a price battle with wireless competitors.
“It’s a reasonably competitive environment,” Comcast cable President Dave Watson said on Thursday’s earnings call. “We have seen the expansion of each fiber and stuck wireless’s footprint. A part of our game plan is we’ll proceed put money into a greater network and compete aggressively but we’re going to take care of financial discipline. Meaning guaranteeing decisions in terms of balancing rate and volume.”
Comcast added 294,000 wireless subscribers within the quarter, because it fights back against wireless company competition by eating into a few of their subscribers. Still, residential broadband has a much higher profit margin for Comcast and derives much more revenue for the corporate.
Comcast reported broadband revenue of $6.4 billion within the quarter from 32.3 million subscribers, or a mean of about $200 in revenue within the quarter per subscriber. Comcast reported $917 million in revenue from its 6.3 million wireless customers — $145 in revenue per subscriber for the quarter.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
WATCH: Comcast reports third-quarter earnings.
