Cable colossus Comcast Corp. detailed advances in video, data and voice services which powered the company to a strong third quarter – one in which the company expanded its customer base with aggressive introductory pricing.
Overall, Comcast recorded a net profit of $548 million for the third quarter, compared to $222 million for the same period in 2005. That doesn’t include one-time gains from system transactions.
The news comes just several days after Cox Communications Inc. detailed gains achieved through a 9-month-old program to market to non-video customers, an effort which yielded gains in voice and Internet access service sales (see story).
Cablecos are turning up the heat in the customer acquisition battle with pricing as key weapon in their arsenal.
“While telcos are just rolling out TV services, cable operators are grabbing business with triple-play packages that include entry level digital tiers, voice and data for $100,” said Maribel Lopez, vice-president at Forrester Research “This magical price point matches service quality with value. The trick for cable operators will be to keep the customers once the promotions have ended.”
Video Services Growth
Comcast’s video revenue increased 9 percent to $4.2 billion in the third quarter of 2006, reflecting growth in digital customers and increased demand for new digital features including VoD, DVRs and HDTV programming, as well as more basic cable rates and subscribers.
The company added 10,000 basic video subscribers for a total of 24.1 million during the third quarter, compared with a decline of 44,000 subscribers in the third quarter of 2005. The additions include a gain of 24,000 subscribers from historical Comcast Systems, offset by a loss of 14,000 subscribers in systems received from other operators and through acquisitions.
Comcast ended the quarter with 12.1 million of video subscribers taking digital services, a 1.6 million or 16 percent increase from a year ago. As of Sept. 30, 52 percent, or 6.2 million, of customers subscribed to digital cable, 34 percent, or 4.1 million, subscribed to digital cable with advanced services (DVR and/or HDTV) and 14 percent, or 1.7 million, customers subscribed to enhanced cable.
Growth in the number of subscribers receiving the enhanced cable service has increased steadily this year as Comcast incorporated this service into its triple-play offer. In the third quarter, Comcast said it added 558,000 digital customers, including 135,000 digital cable and 423,000 enhanced cable subscribers. At the same time, 315,000 digital cable customers subscribed to advanced services either as new customers or by upgrading their service. Comcast added more than 1.5 million digital cable customers with advanced services (DVR and/or HDTV) since the third quarter of last year.
Growth in video revenue and digital cable subscribers also reflects increasing consumer demand for new digital features including VoD, driving a pay-per-view revenue increase of 31 percent in the third quarter compared to the same time in 2005.
Internet Services
Comcast added 536,000 high-speed Internet subscribers during the quarter. The company said that is the most quarterly additions it has had in two years.
Internet revenues increased 22 percent to $1.4 billion in the third quarter, reflecting a 1.8 million or 20 percent increase in subscribers from the prior year. Comcast ended the third quarter with 11 million high-speed Internet subscribers or 24 percent penetration of available homes.
Voice Services
Comcast digital voice (CDV) service is now marketed to 31 million homes or 65 percent of the cableco’s footprint.
Phone revenue increased by 51 percent to $252 million reflecting a significant increase in CDV subscriber additions, reduced by a $39 million decline in circuit-switched phone revenues as Comcast continues to focus on marketing CDV. Comcast ended the third quarter with 2.1 million phone customers. Customer additions include 483,000 new CDV customers offset by the loss of 102,000 circuit-switched customers.
Capital Expenditures
Capital expenditures of $1.25 billion in the third quarter were 25 percent higher compared to the same period last year, driven by an 82 percent increase in net additions over the same time period, according to Comcast. In the third quarter of 2006 more than 75 percent of cable capital expenditures were directly associated with new product offerings and strong consumer demand for products.
Comcast Corp. www.comcast.com
