Cable operators, already gearing up for a slowdown in broadband subscriber growth in the fourth quarter, are likely to see a slight overall deceleration of mobile phone customer additions in Q4, driven by lighter numbers at Charter Communications, according to J.P. Morgan media analyst Phil Cusick.
Cable operators have already warned that the expected slowdown in broadband customer growth could get steeper in Q4. Comcast Cable CEO Dave Watson told a virtual audience at the UBS TMT Virtual Conference in December that it would likely add about 1.3 million broadband customers in 2021, implying that Q4 additions would be about 185,000, its lowest quarterly growth since Q2 2017. Watson was echoed by other cable execs at the conference like Altice USA CEO Dexter Goei, who implied that Q4 broadband subscriber growth could be negative in Q4 and for the year.
But mobile service was expected to continue its torrid growth pace. Comcast’s Watson predicted that his company would add a record number of mobile customers in the quarter, beating its previous best of 285,000 additions in Q3 2021.
In a research note Thursday, Cusick wrote that he expects Comcast to surpass that old mark, adding about 300,000 mobile customers in Q4, ending the year with 1.14 million additions. But he believes Charter will add about 260,000 mobile subscribers, below the 315,000 it added in Q4 2020. He estimated Altice USA would add about 2,000 mobile customers in the quarter, down from 7,000 in Q4 2020.
Overall, Cusick expects cable to add about 562,000 mobile customers in Q4, implying a 20% share of total growth for the sector in the period, compared to 23% in Q4 2020. For the full year, Cusick estimates that cable will add 2.23 million mobile customers, or about 24% of total ecosystem growth, compared to 35% in 2020.
Cusick sees the slowdown continuing into 2022, forecasting that Comcast mobile subscriptions will be about 1.047 million next year, and Charter slipping to 1 million additions. Cusick predicted that Altice USA would grow mobile customers by 29,000 in 2022, up from 13,000 in 2021.
Other analysts have revised their Charter estimates as well. In a January 3 report, Bernstein media analyst Peter Supino pointed to a possible industry-wide mobile deflation risk, and revised his expectation for Spectrum Mobile subscriber additions to 252,000 from 277,000 in Q4.
The answer should come in the next few weeks. Comcast is scheduled to report Q4 results on January 27, with Charter reporting on January 28. Altice USA has not said yet when it plans to release Q4 results, but usually does so in early February.
Cable operators have been aggressively pricing mobile service in the past year — Comcast dropped monthly pricing to $30 per month per line for four lines minimum in April — and have added device promotions and discounts for customers that switch service.
According to Cusick, Comcast’s Xfinity Mobile now offers up to $400 in device credits for any iPhone 13 users that switch — double its prior offer. Cable companies also have benefitted from their ability to bundle wireless service with broadband, which has had a big impact on wireless customer growth.
Cusick added that his estimates for Charter could be a bit low, given the operator’s aggressive discounting in October, dropping monthly charges for two lines or more to $29.99 from $45 per month. And Charter CEO Tom Rutledge has said he sees the wireless business as a huge catalyst for the future.
Back in December at the UBS conference, Rutledge did not offer any future subscriber growth guidance but said that going forward, the biggest growth driver for the business overall is mobile.
And both Charter and Comcast have seen the benefits of bundling broadband and mobile, with efforts to pair the two more aggressively beginning last year.
At the same time, the Big Three (AT&T, Verizon and T-Mobile) wireless players are beginning to see their subscriber dominance wane. AT&T, which Cusick expects to more than triple its wireless subscriber additions in 2021 to 3.19 million from 1.46 million in 2021 — largely due to aggressive device promotions — will see that growth dip to 2.35 million additions in 2022. He predicted that Verizon, which should nearly double its mobile additions in 2021 to 1.101 million from 667,000 in the prior year, will fall back to about 875,000 additions in 2022. T-Mobile, which is expected to add 2.917 million mobile customers in 2021 — up from 1.87 million in 2020, will add 2.4 million in 2022 according to Cusick. ■
Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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