Cable executives say ARPU growth will offset broadband losses to fixed wireless

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Cable companies struggled to add broadband subscribers in the third quarter as competition in the industry intensified and inflation impacted consumer spending. Still, cable executives say higher revenue per user will offset slower subscriber growth.

The three largest U.S. cable companies have all said they are feeling pressure from mobile carriers Verizon Communications Inc. and T-Mobile US Inc., both of which have been banking on fixed-wireless rollouts this year. In the past, six-digit quarter-over-quarter broadband subscriber growth was typical of cable companies. Today, after quarters of losses in broadband, cable broadband is starting to show modest gains.

Comcast Corp. added 14,000 total broadband customers in the third quarter, compared to 300,000 in the same quarter last year. It ended the quarter with 32.2 million broadband customers, up slightly from 31.7 million in the third quarter of 2021. Charter Communications Inc. ended the quarter with 30.3 million internet subscribers after having earned 75,000 during the quarter. Although Altice USA Inc. added fiber customers during the quarter, it lost 43,000 total residential broadband subscribers.

Still, Charter executives expect fixed wireless to be less successful than current projections reflect.

“In terms of impact on competition, some of the smallest gross additions we’re seeing are probably related to DSL conversion going to a new entrant, fixed wireless, instead of coming to us,” said Christopher Winfrey , Chief Operating Officer of Charter. “Given the reliability and scalability issues of fixed wireless products and usage trends, we expect these customers to return to us in the long term.”

As subscriber numbers decline, providers are pushing ARPU growth to maintain revenue stability. Comcast executives remain confident that the company can sustain broadband ARPU growth in the coming quarters in a more competitive environment by combining Internet and mobile offerings. Comcast’s broadband revenue grew 5.7%, driven by ARPU growth, said Chairman and Chief Financial Officer Michael Cavanagh. Charter, which reported broadband revenue ARPU growth of 2.2% in the quarter, attributed rising broadband prices to inflationary pressure.

“We have recently suffered an increase in broadband prices and that is a result of the inflationary pressures that we have seen,” Charter CEO Thomas Rutledge said. “At the same time, it doesn’t negate how our primary revenue opportunity is growing, which is to build more customers faster and build those customers with more products associated with each login so that our ARPU and revenue grow together. . »

Altice’s worse-than-expected third quarter included losses of broadband customers, but the company continues to bet on its fiber development plan for long-term growth. Altice added 321,000 fiber runs during the third quarter, reaching a total of 1.9 million runs. The company expects fiber growth to slow in the fourth quarter as cold weather hampers construction. Altice also plans to use mobile-broadband packages to maintain value and attractive pricing amid growing competition.

“We strongly believe that we are on track to improve on these trends and return to broadband growth through our growth investments, including our fiber rollout and multi-gig speed launches, customer experience, new build expansion and investment in distribution channels,” said Altice Executive Chairman Dexter Goei.

Altice’s stock fell 24% the day after the earnings release and was down 72.6% year-to-date to Nov. 3. Charter’s stock is down 47.2% year-to-date while Comcast’s has fallen 39.6%.

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