Comcast (CMCSA) shares plunged nearly 10% on Monday after CEO Dave Watson revealed a grim forecast for broadband subscriber losses. Speaking at the UBS media conference, Watson projected that Comcast could lose over 100,000 broadband subscribers in the fourth quarter, exceeding Wall Street’s consensus expectation of a 63,300 decline, according to Bloomberg estimates.
Comcast expects over 100,000 broadband subscriber loss in Q4
The announcement comes after Comcast reported losing 87,000 internet customers in Q3, citing a “competitively intense” broadband market. Increased competition from mobile providers like Verizon, T-Mobile, and AT&T, which gained subscribers in the same quarter, has challenged Comcast’s position. Additionally, hurricanes in the Southeast compounded the subscriber decline, contributing to an estimated loss of 10,000 customers.
The company also faces revenue pressure, with Watson indicating that average revenue per user (ARPU) will remain at the lower end of the expected 3%-4% growth range for the quarter. Compounding matters, Comcast continues to grapple with cord-cutting trends, reporting a decline of 365,000 TV subscribers as consumers increasingly shift to streaming services.
During the third quarter, Comcast reported a loss of 87,000 customers, with the company noting that subscriber numbers had improved in part due to seasonal factors and marketing efforts related to the Summer Olympics. Watson indicated that the company’s performance in Q4 is likely to mirror the trend seen in the first half of the year, when broadband subscriber losses averaged under 100,000 per quarter. He stated, “If you look at the first half of the year, we lost just about 100,000 [broadband subscribers].”
The competitive pressure is pronounced as consumers seek more affordable options, which has led to challenges for traditional cable broadband providers. As larger players like Verizon and T-Mobile offer flexible plans, Comcast has faced heightened competition for price-sensitive users. Watson emphasized that the market remains “competitively intense,” particularly among consumers keen on finding better value in their services.
In addition to competition from wireless companies, seasonal trends have previously benefited Comcast, as seen in the improved subscriber numbers during back-to-school periods. However, Watson conveyed caution regarding the ongoing nature of subscriber losses expected in Q4. He remarked, “So when you add all these things together… we could be looking at a broadband subscriber loss in Q4 of just over 100,000.”
Further complicating matters, hurricanes that impacted the Southeast earlier in the fall reportedly contributed to approximately 10,000 additional broadband losses. These events, coupled with competitive pressures, have raised concerns about the company’s revenue per user, which Watson forecasted to remain at the lower end of a range between 3% and 4% for the current quarter.
Despite the struggles on the broadband front, Comcast noted some stabilization in its higher-end internet packages. As of September 30, the company had nearly 32 million domestic broadband customers. However, these figures reflect a broader trend as the company also revealed a decline of 365,000 cable television subscribers, highlighting ongoing cable-cutting trends fueled by consumer shifts toward less expensive streaming alternatives.
Comcast’s recent decision to spin off its cable properties, except for Bravo, illustrates its strategy to adapt to the evolving media environment. This move, dubbed “SpinCo,” is intended to enable the company to navigate the challenges posed by increased cord-cutting. The planned spin-off will include NBCUniversal’s cable networks, such as USA Network, CNBC, and NBC Sports.
The company’s stock market performance responded significantly to Watson’s remarks, underscoring investor concerns regarding the future trajectory of broadband services. The sector faces obscured challenges as the competitive environment evolves. While some improvements were observed in the third quarter, it remains to be seen how Comcast will navigate these pressures into 2024.
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Featured image credit: Comcast
