Cable companies struggled to add broadband subscribers in the third quarter as industry competition ramped up and inflation impacted consumer spending. Still, cable executives say increased per-user revenue will make up for slowing subscriber growth.
The three largest U.S. cable companies all reported feeling pressure from wireless carriers Verizon Communications Inc. and T-Mobile US Inc., which have both gone all-in on fixed wireless rollouts this year. In the past, quarter-to-quarter six-digit broadband subscriber growth was typical for cable providers. Now, after quarters of broadband losses, cable broadband is beginning to pick up modest gains.
Comcast Corp. added 14,000 total broadband customers in the third quarter compared to 300,000 in the same quarter last year. It ended the quarter with 32.2 million broadband customers, up slightly from 31.7 million in the third quarter of 2021. Charter Communications Inc. ended the quarter with 30.3 million internet subscribers after gaining 75,000 in the quarter. Though Altice USA Inc. added fiber customers during the quarter, it lost 43,000 residential broadband subscribers overall.
Still, Charter executives expect fixed wireless to be less successful than current projections reflect.
"In terms of competitive impact, some of the lower gross additions we see probably relate to DSL conversion going to a new entrant, fixed wireless, instead of coming to us," said Charter COO Christopher Winfrey. "Given the issues with fixed wireless product reliability and scalability and usage trends, we expect those customers to find their way back to us over the long term."
As subscriber numbers drop off, providers are pushing ARPU growth to keep revenue stable. Comcast executives remain confident the company can maintain broadband ARPU growth in the coming quarters in a more competitive environment by bundling internet with mobile offerings. Comcast's broadband revenue increased 5.7%, driven by growth in ARPU, said President and CFO Michael Cavanagh. Charter, which had broadband revenue ARPU growth of 2.2% during the quarter, attributed broadband price hikes to inflationary pressure.
"We've passed through recently a broadband price increase and it was a result of the inflationary pressures that we've seen," said Charter CEO Thomas Rutledge. "At the same time, it doesn't negate the way our primary revenue opportunity is developing, which is to create more customers faster and to create those customers with more products associated with each connection so that our ARPU and the revenue go up together."
Altice's worse-than-expected third quarter included broadband customer losses, but the company continues to bet on its fiber buildout plan for long-term growth. Altice added 321,000 fiber passings during the third quarter, reaching a total of 1.9 million passings. The company expects fiber growth to slow in the fourth quarter as colder weather impedes construction. Altice also plans to utilize broadband-mobile bundles to keep value and prices attractive amid the growing competition.
"We firmly believe that we're on track to improve these trends and return to broadband growth through our growth investments, inclusive of our fiber deployment and multi-gig speed launches, customer experience improvements, new build expansion and distribution channel investment," Altice Executive Chairman Dexter Goei said.
Altice's stock sunk 24% the day after reporting earnings and was down 72.6% year-to-date as of Nov. 3. Charter's stock is down 47.2% for the year to date while Comcast's has dropped 39.6%.
