New Street Research suggested that cable network operating and capital expenditures could soon fall 10% to 15%, with operators re-engineering their networks into deep-fibered, decentralized architectures with software-based CPE cycles.
In a note to investors led by analyst Charlie Gaynor, New Street said Comcast is still a couple of years away from the end of the investment cycle in this part of the business, but capex should fall once it's complete.
Regarding the two other major publicly traded U.S. cable operators, New Street added, “We had already assumed that Charter’s capex would fall sharply, following the integration and upgrade. We are not lowering estimates materially on the heels of this analysis; however, it gives us greater conviction that our forecast is achievable. Similarly with Altice U.S., we had already assumed that capex falls sharply following their fiber deployment.
More precisely, the metrics the analysts are concerned with are opex per customer and capex per home passed.
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Overall, the European New Street analysts offered a bullish assessment of the U.S. cable market, stemming from growing broadband penetration, enterprise business and wireless opportunities.
“We have always assumed that capex falls once companies complete their various upgrade programs,” New Street said in its memo. “Our prior capex estimates assumed that capex to revenue would fall to 11.6% by 2022, resulting in capex that was 4% to 12% below consensus. The analysis from our companion report suggests that should fall 500 basis points more than we had previously expected, resulting in 2022 capex estimates that are now 10% to12% below consensus for Comcast and Altice USA.”