Cable operators Altice USA, Charter Communications and Comcast reported third quarter earnings this week and each continued to add wireless subscribers through their respective MVNO mobile brands.
Charter came out on top among cable MVNOs in terms of adding new subscribers, with more than 360,000 net adds. Like Comcast, Charter mobile customers ride on Verizon’s network and also use the cable operators’ expansive network of Wi-Fi hotspots. Altice Mobile, meanwhile, added fewer than 20,000 lines.
The Altice Mobile branded wireless service launched later than Comcast’s Xfinity Mobile and Charter’s Spectrum Mobile. Altice is the only major cable MVNO not using Verizon’s network, instead riding on Sprint’s legacy network but expects a near-term move to T-Mobile.
Here are some mobile highlights from cable MVNOs' Q3.
Cable's Q3 mobile subscriber metrics:
Charter: The company reported a whopping 348,000 residential net mobile additions and 15,000 small and medium business lines in Q3. The 363,00 wireless lines are 87,000 more than Q3 2019 and exceeded Wall Street expectations by about 59,000.
Year-to-date Charter has scooped up 942,000 net customers, bringing its total to 2.06 million mobile lines at the end of Q3.
Comcast: Added 187,000 net mobile customers, ending the third quarter with a total wireless base of 2.6 million.
Altice: Recorded 18,000 net wireless additions, for a total mobile base of 126,000. Altice said its wireless service has reached 3.5% penetration of its total residential customer base.
RELATED: Editor’s Corner: Comcast, Charter, Altice gain wireless subs in Q2 — so what?
Charter
CEO Tom Rutledge on Friday’s earnings call referenced the 210 CBRS PALs Charter purchased for over $406 million.
“Over a multi-year period, we’ll execute on our inside-out strategy with small cells attached to our existing network, using unlicensed, and now our licensed spectrum, based on the disciplined return-on-investment approach, consistent with our goal of reducing mobile operating costs, “ Rutledge said, according to a SeekingAlpha transcript.
Other earnings call tidbits:
- Plans to use continued improvements in Wi-Fi and unlocked Wi-Fi spectrum, including 5.9 GHz inside dwellings.
- Charter’s CBRS build is tied specifically to a guaranteed effective cost-reduction, with a clear ROI and low-risk.
- CBRS build-out doesn’t require a complete footprint and will be opportunistic by location, as incremental capacity is specific to the location and amount of traffic.
Comcast
Comcast spent $458.7 million for 830 CBRS PALs and CEO Brian Roberts said the operator will try to build optionality on a cost basis.
Other tidbits:
- Comcast likes its current position, and similar to Charter, said it will be opportunistic about infrastructure builds down the road but is not in a rush and is still looking at buildouts from an engineering perspective.
- Continues to see its by-the-gig and unlimited wireless pricing options as unique from major carriers.
Analysts at Cowen Equity Research also see Comcast’s BYOD (bring your own device) and mix-and-match pay-as-you-go and Unlimited pricing plans, and low-cost unlimited plan “as compelling value propositions in a recession."
In a Thursday note to investors the firm acknowledged Comcast’s promotions for iPhones are tempered compared to those of AT&T, Verizon and T-Mobile, but expect Comcast will be more aggressive during the holiday season and Black Friday. However, the analysts “still believe Cable can win share on its price-value proposition alone.”
RELATED: Comcast, Charter add nationwide 5G, iPhone 12 to lineups
Financial
Charter
- Mobile revenue totaled $368 million, including $172 million in device revenue.
- However, mobile expenses were $456 million, consisting of mobile device costs (tied to device revenue), customer acquisition and MVNO usage, costs and operating expense.
- Mobile-related capital expenditures were $139 million.
- Mobile EBITDA loss of $88 billion
Executives reported that Charter’s mobile EBITDA is still negative because of customer growth costs, but have decreased even with higher subscriber growth. Since passing the 2 million subscriber lines, Charter CFO Chris Winfrey said that aside from costs that come from acquiring subscribers, mobile is now an incrementally positive business for Charter, with mobile service revenues exceeding all other regular operating costs.
To that point, in a Friday note to investors, New Street Research analysts said that Charter’s wireless losses are receding faster than the firm expected, as the Spectrum Mobile business is scaling more quickly than anticipated.
EBIDTA growth was 13.5% with mobile, and would have been 16% if not for pandemic impacts, according to New Street.
“Mobile losses will only recede faster in 2021, providing a strong lift to overall EBITDA growth,” wrote the New Street team led by Jonathan Chaplin. “The business that we suspect has been given a negative enterprise value by the market up until now will finally start paying its way.”
Comcast
- Mobile revenue increased 22.8% to $400 million (Comcast’s consolidated Q3 revenues were $15 billion)
- Xfinity Mobile contributed a negative $50 million drag on EBITDA in the third quarter, according to Cowen Equity Research.
Cowen analysts expect Xfinity Mobile momentum to continue “and on track to EBTIDA break-even (3.0-3.5MM lines) by YE2021,” the firm wrote in a Thursday note to investors.