Cable operators continued to grow their mobile businesses in the first quarter and take share from incumbent wireless carriers, despite facing headwinds from the coronavirus pandemic.
Combined, Charter Communications Inc., Comcast Corp. and Altice USA Inc. added more than half a million net mobile customers during the first quarter. Charter's Spectrum Mobile led the pack with 290,000 net adds, while Comcast's Xfinity Mobile followed with 216,000. Altice Mobile, the most recently launched cable mobile offering, added 41,000 net lines.
While all three companies saw their mobile subscriber additions negatively impacted by the pandemic, the mobile offerings nevertheless generally managed to outperform expectations.
Charter's 290,000 net adds, for instance, were well ahead of Wall Street consensus estimates of 246,000 net adds, according to Jeffrey Kvaal, a telecom analyst at Nomura's Instinet. They were also up year over year from 176,000. Kvaal noted the business continued to "gain momentum," forecasting that Charter will tally more than 1 million net adds in 2020.
Comcast also came in ahead of analyst estimates, with its 216,000 net adds beating a forecast of 200,000 from Lightshed Management partner and telecom analyst Walter Piecyk. The 2020 figure was up from 170,000 net adds in the first quarter of 2019.
Comcast's Xfinity Mobile continues to lead its cable peers in terms of total customers, which is to be expected given that Xfinity Mobile launched in 2017, more than a year before Charter's Spectrum Mobile and two years before Altice Mobile. Comcast ended the first quarter of 2020 with almost 2.3 million mobile customers.
Piecyk wrote that Comcast's wireless EBITDA loss "dropped to a record low to start 2020 as xFinity Mobile gains traction, moving closer towards our breakeven target."
Piecyk believes Verizon Communications Inc. and AT&T Inc. are Comcast's "primary source of gross additions," estimating that Comcast grew gross adds by more than 25% in the first quarter "compared to slight growth at AT&T and a slight contraction at Verizon."
Verizon lost 68,000 net postpaid phone connections in the first quarter versus a net loss of 44,000 in the year-ago period, while AT&T reported 163,000 postpaid phone net adds, up year over year from 79,000.
Piecyk's comments are line with survey data from Kagan, a media research group within S&P Global Market Intelligence.
More than 26% of Xfinity Mobile customers surveyed in February churned over from Verizon Wireless, according to data from Kagan analyst John Fletcher. Nearly 20% came from AT&T.
For Charter, more than 17% of surveyed Spectrum Mobile customers churned from AT&T and 14% came from Verizon.
Fletcher noted in a May 4 report that even when Verizon loses mobile customers to Comcast or Charter, the company still sees some revenue as both cable companies rely in part on reselling wireless service from Verizon. Specifically, the mobile services leverage each cable company's respective network of Wi-Fi hotspots and a mobile virtual network operator agreement with Verizon. As such, any mobile usage that occurs off the Wi-Fi network leads to payments to Verizon from Comcast and Charter.
As long as consumers remain at home, those MVNO payments to Verizon may be reduced, as more traffic is off-loaded to customers' home Wi-Fi networks. Comcast said in late April that on Xfinity Mobile, the company had seen a 20% decline in LTE data usage and a 40% increase in mobile data usage over Wi-Fi.
While the pandemic may be driving more data on operators' Wi-Fi networks versus carriers' LTE networks, executives said it also suppressed mobile sales efforts.
Charter CFO Christopher Winfrey said during the company's first-quarter earnings conference call that through February, mobile net additions had continued to accelerate. By mid-March, however, mobile sales decelerated as Charter began closing its retail stores and sales calls focused on self-installation instructions for cable or broadband rather than on mobile add-ons or upgrades.
