Comcast is working to ease palpable investor fears that its “runway” to sustained broadband growth is narrowing.
“If you look at the overall numbers of broadband, the overall broadband penetration being around 80%, there is room just there,” said Dave Watson, president of Comcast Cable, during Comcast’s fourth-quarter earnings call Wednesday.
“So home growth is solid in 2017—home’s past growing by 1.4%,” he added. “The DSL base is still substantial, so overall, there’s room for growth. But what we're focused on is what's working. What's working is, this focus … around innovation, and we have a great scaled infrastructure, we’ve [DOCSIS] 3.1 that's now at the end of the year at 80%. We'll complete that by the end of 2018, and that puts us in position to have very large scaled on gig rolled out.”
Prior to Comcast’s fourth-quarter earnings call Wednesday, Nomura Instinkt analyst Jeffrey Kvaal suggested that Comcast’s growth in high-speed internet customers “may narrow as a decline in DSL subscribers, rising fiber competition from telco rivals and wireless technologies, such as LTE Advanced and 5G, emerge.”
Comcast reported the addition of 350,000 high-speed internet customers in the fourth quarter, giving it 1.168 million for all of 2017. That’s a deceleration from the 1.372 million added in 2016 and the 1.367 million added in 2015.
“If the rate of change of net adds seen in 2017 continues, it is likely to drive down net adds to below 1 million by 2020,” wrote Barclays in a note put out this morning, largely supporting Watson’s thesis.
“ARPU growth could become an important lever as sub growth slows, and this will likely be assisted by upgrades to faster speeds and greater connected device penetration (and therefore demand for services like [managed Wi-Fi product] xFi),” Barclays added.
Comcast said revenue from HSI services increased 8.4% in the fourth quarter.