Comcast shares tumble on customer losses

Comcast saw its shares fall on its Q1 earnings amid higher than expected customer losses, despite beating analysts’ expectations on earnings growth.

Much attention was focused on Comcast’s loss of 65,000 broadband customers, including 10,000 business customers, in the US, compared with net additions of 5,000 for the prior year quarter.

Comcast also lost 487,000 US video customers during the first quarter, an improvement on the 614,000 lost for the prior year quarter.

The domestic customer losses were offset by a net gain of 289,000 wireless customers, but this was lower than the 355,000 added in the prior-year quarter.

Overall, Comcast lost a net 166,000 customer relationships over the quarter, with net losses of 94,000 domestically, taking its total to 31.6 million RGUs, and 65,000 international losses, taking that total to 17.8 million.

That compared with a total of 82,000 net adds last year, including 111,000 international net adds.

“The broadband market remains extremely competitive, particularly within the market for more price-conscious consumers. We continue to be intensely focused on segmentation, providing customers with options that meet both their lifestyle and budget,” said president Mike Cavanagh on the Comcast earnings call.

“Importantly, we are striking the right balance between ARPU and subscribers, which is clearly reflected in our first quarter results where, despite modest subscriber losses, ARPU grew over 4%, driving mid-single digit growth in residential broadband revenue to over $6.5 billion.”

To address the challenges it faces in the US domestic broadband market, Comcast has just introduced low-cost offering Now Internet, based on the same brand used for streaming, initially by Sky in the UK. This will enable it to segment its offering to target a lower-cost segment.

“Across our connectivity and platforms business, we’re focused on profitably serving each segment of the market, from our premium and traditional customers who want fully features products to more price-driven consumers. With regard the latter, we are introducing Now, a new brand and product portfolio targeting the prepaid market that delivers high quality, low cost internet, mobile and streaming TV products with simple all-in pricing,” said Cavanagh.

Bright spot for Peacock

One operational bright spot was three million net adds for streamer Peacock. Peacock in fact grew its base by 55% year on year, taking its total to 34 million paying subs. Peacock revenue increased by 54% to US$1.1 billion, and EBITDA also improved – but Peacock’s losses still weigh on the company’s overall numbers.

Overall, Comcast turned in revenues of US$30 billion for the quarter, up 1.2%, and adjusted EBITDA of US$9.36 billion, down 0.6%.

“Our team is continuing to execute exceptionally well in a dynamic and competitive marketplace. We delivered double-digit growth in Adjusted EPS and free cash flow while returning $3.6 billion to shareholders, investing aggressively in our businesses, and maintaining our strong balance sheet,” said chair and CEO Brian Roberts.

“We grew broadband ARPU over 4%, delivered 7% revenue growth in our connectivity businesses, and expanded our Adjusted EBITDA margin across Connectivity & Platforms. In Studios, following a record year with eight Oscars including Best Picture, our film group continues to leverage our incredible IP with hits like Kung Fu Panda 4; and Peacock remains one of the fastest growing domestic streamers with impressive acquisition, retention and engagement trends. Overall, I am proud of our ability to consistently perform at the highest levels and continue to position the company for long-term growth.”