Cablevision (NYSE: CVC) sees its expanding Wi-Fi network as a lever to disrupt the current mobile data market and will be aggressive in developing new products that use those strengths, CEO James Dolan said during a call detailing the company's first quarter 2014 earnings.
"We've been saying for quite some time that Wi-Fi is a differentiator for the business (and) now with the addition of the smart routers and the expansion of our footprint and how we reach our customers and the robustness of the network … you're going to see new products, something that we haven't seen for a while," Dolan said.
Some of those products, he promised, will be "disruptive to some of the current market places, particularly the wireless data market."
Wi-Fi, he pointed out, is an unlimited data service for Cablevision and the company "will continue to push that trend and that we're going to be aggressive in finding and rolling out new products that ride on that network."
Among the new products that Cablevision has already launched is a Wi-Fi smart router that Cablevision will use to reach "approximately 1 million Optimum Wi-Fi access points" by the end of 2014, Dolan said, pointing that there has been "significant growth in our Optimum Wi-Fi usage as total data passed as more than doubled in the last year."
In a research note, Craig Moffett of MoffettNathanson Research cited the "continued densification" of Cablevision's Wi-Fi network as an opportunity to lower customer churn and build new business opportunities.
As far as earnings are concerned, Cablevision made more money overall, more average revenue per cable customer and more revenue in the cable segment but still lost 2,000 video consumers in the first quarter.
The Long Island-based cable operator said that its consolidated net revenues were up 4.3 percent to $1.58 billion compared to the first quarter of 2013, consolidated adjusted operating cash flow was up 24.8 percent to $434.3 million, and consolidated operating income increased 92.8 percent to $207.1 million. At the same time, average monthly cable revenue per customer rose to $148.22, $8.42 (6 percent) more than first quarter 2013. Average monthly revenue per video customer was even higher at $168.34.
Amid all the positives, though, the cable company continued to leak video subscribers, losing 14,000 in the quarter to fall to 2.799 million total video customers. At the same time, the high-speed data customer base grew by 8,000 to 2.788 million and voice customers climbed 8,000 to 2.28 million. Overall, the service provider said it lost a total of 2,000 customers year-over-year to settle at 3.186 million.
"In a competitive marketplace we gained data and voice customers in the first quarter while overall customer relationships and video customers declined," Dolan said in prepared comments to analysts.
The company is continuing to take a disciplined approach to promotional discounts.
This overall approach to pricing and discounting "is contributing to the lower voluntary churn that we're experiencing," said Dolan.
The belt tightening "could bolster Cablevision's financial performance," added Moffett, who threw out the ever-present tease that the company "may be acquired, perhaps by another operator in the New York region or by the controlling Dolan family."
Moffett also cautioned that Cablevision, perhaps more than any other service provider, could be adversely impacted if Verizon (NYSE: VZ) adopts a more aggressive FiOS marketing strategy within its footprint.
- Cablevision has this press release
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