Comcast, Charter and Altice managed yet another strong quarter of wireless subscriber growth in Q3 2022, cumulatively adding 734,000 net mobile customers, the highest number of mobile customer net additions in a quarter yet. Spectrum Mobile (Charter) led the pack with 396,000 net additions, while Xfinity Mobile (Comcast) added 333,000 mobile customers. Both were record highs. Meanwhile, Optimum Mobile (Altice) managed 5,000 mobile customer additions, down from the previous quarter’s 33,000 additions.
*From Q3 earnings
Cumulatively, the cable players added more mobile customers than Verizon and AT&T combined, trailing only T-Mobile for the quarter. Strong service pricing and attractive bundling at the cable players continue to make inroads with customers, especially those looking to tighten their belts due to rising inflation and a gloomy economic outlook. This should benefit the cable players in their search for more customers in the year ahead.
*From Q3 earnings
Subscriber growth has been strong at the cable players, but penetration is still relatively low, with mobile subscriptions only penetrating about 14% of Charter and Comcast’s respective customer relationships. This means that there is plenty of runway for subscriber growth to continue, which should be expected. Mobile is an increasingly pivotal part of Charter, Comcast and Altice’s offerings as legacy video and voice services are losing customers. While mobile will likely never surmount broadband services for the cable players, it is likely to be the second most important service for these companies in the next several years and the primary driver of revenue growth. The pairing of strong mobile service pricing along with bundling opportunities like Charter’s new Spectrum One package should help to improve total revenue per customer while also making it even more difficult for broadband customers to churn away to competitors. Despite the strong growth, the cable players remain relatively small smartphone sales channels compared to the major carriers due to minimal sales through upgrades and high levels of BYOD (bring your own device) according to Counterpoint’s US Monthly Sell-Through Tracker.
*From Q3 earnings
Beginning in October, Charter doubled down on customer acquisition, announcing new mobile line pricing and a new bundle, Spectrum One. Earlier, a single mobile line of unlimited data at $45/month and two or more lines at $29.99/line/month were available. Now, mobile lines with unlimited data are available at $29.99/month starting with the first line. The new bundle that Spectrum is offering puts together home internet and a single mobile line for just $49.99/month, a very strong offering for a package that if purchased separately would be nearly $85/month. This aggressive pricing should accelerate mobile customer acquisition in Q4 2022 and into 2023.
*From Spectrum’s website
Along with the strong growth in mobile subscribers has come impressive growth in mobile revenues. Spectrum’s mobile revenues were up 40.2% YoY while Xfinity’s were up 30.8% YoY. Due to the extensive Wi-Fi networks of both companies, they are able to offload most of their traffic onto Wi-Fi, keeping payments for using Verizon’s host network at a minimum.
*From Q3 earnings
Operating margins should improve for Xfinity and Spectrum as well in the coming years. Comcast announced last month that it was partnering with Samsung to build out small cells in key metropolitan areas to offload traffic from Verizon’s host network onto the CBRS spectrum it purchased at auction. Spectrum is yet to make an announcement, but its strategy will likely be the same – to keep costs paid out to Verizon at a minimum. While this will require upfront capex, it will pay off over the long term.
Heading into Q4 2022 and 2023, the cable players are well positioned to continue skimming subscribers off the postpaid carriers. They offer a strong value proposition by bundling mobile and broadband services. Margins should continue to improve as Comcast and Charter look towards building out small cells. As economic conditions turn sour in 2023, cable players should benefit, offering strong pricing for consumers looking to trim down their budgets. Expect the cable players to continue their strong streak of growth well into 2023.
