Comcast 3Q08 Results Show Strength in High Speed Data and Phone Business, Losses in Video Services, and an Uncertain Future Consumer Outlook
The largest U.S. cable operator showed surprising resilience in a number of key business areas during the 3rd quarter 2008 as consolidated revenues increased 10% to US$8.5 billion in the period, and 11% YTD to $25.5 billion. Comcast gained more subscribers for its cable broadband service - 382K customers - than both AT&T and Verizon Communications combined, which together only saw an increase of 277K new high-speed data customers. Gartner expects Comcast to keep its momentum going for net new high speed data customer gains with the addition of ultra-high-speed services at 50 Mbps, due to launch in 10 markets this year and footprint wide in 2009.
With cable speed tiers besting DSL in most markets, Comcast confirmed that approximately 66% of new cable modem customers are the result of customer defections from DSL services. But bundled pricing and promotional offers to stay competitive are eating into revenues: Average revenue per subscriber (ARPU) for cable modem customers was $41.74, down due to the effects of multi-service bundling, new lower speed tiers of service and new promotional offers. Comcast continues to gain traction with its broadband service, with 14.7 million customers and a penetration level of 30% of homes passed within its footprint.
In its telephony business, Comcast continued to gain very healthy 483K net new customers in the quarter, for a total of more than 6.1 million Comcast Digital Voice subs; revenues for its phone business grew 44%, to more than $690 million. Net adds for the quarter were down 29% year over year however, from 681K in 3Q07. As with high speed data, ARPU per voice subscriber was down 5%, due to the effects of bundling and promotional offers. Phone service has been an engine of growth for the cable operator and penetration stood at 13% of its homes passed footprint.