High-Speed Internet Driving Comcast Growth, CEO Says
Comcast’s focus on providing customers with the fastest Internet speeds is behind the company’s growth, said CEO Brian Roberts on its Q2 call Wednesday. Comcast’s combined subscribers increased by 189,000 in Q2 to 50.5 million, a 37 percent increase in net additions compared to 2012’s Q2. That was spurred by broadband customers and an increase in voice subscribers, Comcast said. Revenue from broadband also increased by 8 percent to $2.586 billion, which along with increases in business services and video led to a 5.8 percent increase in revenue from Comcast’s cable division to $10.5 billion. “The more the consumer desires speed, the better it is for our company,” said Roberts.
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Comcast has increased speeds across its entire footprint, said Roberts. The company is emphasizing growth in Wi-Fi, which he called “the center” of Comcast’s strategy. The company has more than 4 million wireless gateways and 250,000 wireless hotspots, he said. Roberts linked the company’s emphasis on Wi-Fi to Americans’ expanded use of mobile devices that use it. Wi-Fi allows customers to make their homes into a “platform” for using mobile devices, he said. “The best way to enjoy mobile devices is to get our high-speed data products.”
X2, Comcast’s new cloud-based set-top box user interface optimized for Internet Protocol video (CD June 12 p14), will be on the market by the end of the year, Roberts said. Its predecessor, X1, is still being rolled out, but will be available to half of Comcast’s nationwide footprint by the end of the year, he said. X2 illustrates how quickly companies can innovate through software, Roberts said.
Total revenue increased 7 percent to $16.3 billion. Comcast net income rose 6.8 percent to $1.74 billion. Along with broadband, that growth was spurred by 26 percent revenue growth in business services, to $788 million. Comcast said 85 percent of its business customers are small businesses. The company’s stock closed up 5.7 percent Wednesday at $43.11.
Although Comcast lost video subscribers in Q2, the losses were 10 percent lower than the same quarter last year, Comcast said. Forty-five percent of Comcast video subscribers receive “advanced services” -- either DVR or HDTV, the company said. “Cable had outstanding growth” this quarter, said Roberts.
Pivotal analysts called Q2 “nicely better than expected cable data results.” Revenue growth was also driven by 8.9 percent increase in sales at NBCUniversal to $6 billion. The revenue increase was spurred by the box-office success of the latest iteration of the Fast and the Furious franchise and Despicable Me 2 and high TV ratings, Comcast said. “NBCU’s results exceeded our estimates pretty meaningfully,” said Evercore Partners in an email to investors.