Cable wireless services are becoming a growing threat for US mobile operators as cable giants Comcast and Charter reported significant subscriber gains in their respective first quarter earnings.
As a result of those wireless subscriber increases, MoffettNathanson analyst Craig Moffett wrote in an updated research note: “the market needs to adjust its lens and start taking Cable’s wireless business seriously.”
Charter added 373,000 mobile lines in the quarter across its residential and small-and medium-sized business customers compared to 300,000 during the first quarter of 2021. Those gains brought the cable operator’s mobile subscriber base to 3.9 million.
Mobile revenue grew 40 per cent to $690 million in the quarter. Wireless now accounts for 5.2 per cent of Charter’s revenues, according to MoffettNathanson.
Yesterday (28 April) Comcast announced it added 318,000 mobile lines, its fifth consecutive quarter of all-time bests since its Xfinity Mobile service launched in 2017.
As a result of those subscriber additions, its wireless revenue increased 32 per cent in the quarter.
Comcast has added 1.2 million lines over the past 12 months to bring its total number of of wireless subscribers to 4.3 million.
MoffettNathanson estimated mobile generated 4.1 per cent of Comcast’s cable revenue, up from 3.2 per cent in Q1 2021.
Moffett noted that Comcast and Charter’s MVNO agreements with US mobile operator Verizon allows both of them to offer wireless services at price points that are competitive, or lower, when compared to Verizon and AT&T.
T-Mobile US’ prices are lower, so it doesn’t face the same competitive threat as AT&T and Verizon, according to MoffettNathanson.
Going forward, the cable operators’ purchase of CBRS spectrum will allow them to offload wireless traffic themselves, and, therefore, expand their profit margins, the analyst wrote.
Charter expects its trial to begin in mid 2022.
While both Comcast and Charter reported increases in broadband subscribers in the quarter, those additions were at slower rates compared to previous quarters.
Moffett stated the cable operators’ new growth engine – wireless – is “rather neatly taking the baton from their old growth engines,” broadband.
“Cable wireless is now ready for its star turn,” Moffett noted.Subscribe to our daily newsletter Back