Despite operating in a footprint in which 70% of broadband competition comes from DSL operators, Cable One lost around 3,300 broadband customers in its legacy footprint in the third quarter.
It was the second straight quarter in which the Phoenix, Arizona-based mid-sized operator lost residential high-speed internet users. Year over year, the cable company has only grown its HSI base by only 1%.
Cable One’s business services division added 600,000 HSI customers in the third quarter. The company attributed the stunted growth in broadband services to the impact of Hurricane Harvey in September, which affected 4,500 customers, according to Cable One CFO Kevin Coyle. He said residential broadband growth would have been closer to 2% year over year if not for Harvey.
Not accounting for the recent acquisition of cable operator NewWave, which Cable One now calls its “Northeast Division,” the operator lost another 10,700 pay TV customers.
Without the contribution from the NewWave operations, net income increased 37.3% to $28.7 million and adjusted EBITDA increased 12.4% to $98.0 million. Total revenues were $253.8 million, including a $47.5 million contribution from NewWave operations, compared to $205.5 million in the third quarter of 2016.
“It’s hard to find fault with any of the other numbers here,” said MoffettNathanson analyst Craig Moffett, turning the attention away momentarily from the slow broadband subscriber growth. “Costs are sill falling, margins are rising, and EBITDA growth is fine, or perhaps better than ‘fine.’ Actually, good. But as ever, one wonders how long all this will be sustainable.”
In a nutshell, Moffett continues to wonder how Cable One can continue to shrink its video business and grow overall without expanding its broadband penetration.
Beyond the numbers, Cable One also announced the retirement of Thomas Might as executive chairman. Julie Laulis, who replaced Might last year as CEO, will now tack on the executive chairman role. Might, who is only 65, is a four-decade Cable One veteran, joining The Washington Post in 1977 and standing on the ground floor for the launch of Post-Newsweek Cable, which later became Cable One.
He’ll stay on in a director role for the company.
“We want to express our sincere thanks to Tom for his leaderships of the board and more than two decades of service to Cable One,” Laulis said at the end of today’s earnings call.