Cable One continued to expand margins and revenue in the third quarter.
The Phoenix, Arizona-based mid-sized cable operator reported a 6.2% surge in overall revenue to $285 million, driven by its April acquisition of Fidelity Communications, as well as surging residential broadband and business services sales.
Residential high speed internet revenue increased 8.2% to $134.3 million, with subscribers increasing 3.5% year over year to 618,983. Average revenue per residential broadband user came in at an industry-leading $72.09, up 4.7% over Q3 2018.
Business services revenue increased 28% to $50.6 million, with the customer base swelling by 8.7% to 114,913 since the end of the third quarter of 2018.
Video revenue dropped another 4.2% to $81 million. Residential video users declined 9.4% to 283,303 year over year.
According to MoffettNathanson principal analyst Craig Moffett, Cable One’s margins stand at nearly 50%.
“Cable One still has one of the industry’s lowest broadband penetration [rates] of homes passed at just 32.2%,” Moffett wrote in a note to investors, once again kicking the tires on Cable One’s super-high 16x stock valuation. “And with limited fiber-based competition, their ceiling is arguably one of the highest in the country. They are at least growing the broadband business at a rate fast enough to drive meaningfully higher penetration.”
With the business plan seemingly solid, Cable One CEO Julie Laulis doesn’t seem to be interested in exploring new business opportunities beyond expanding the company’s broadband footprint through M&A.
Asked about establishing an MVNO deal similar to what the larger U.S. cable companies have done, she responded, “I don’t think that the MVNO model right now is something that we find a large interest in giving the margins and the amount of work and growth and opportunities that we have with our existing business right now.”
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