Credit ratings agency Moody’s Investors Service raised its rating on the cable television sector to “positive” from “negative” on Tuesday, fueled mainly by expected growth in broadband.
In a research note Tuesday, Moody’s wrote that it expects cash flow in the sector to rise more than 5% over the next 12-to-18 months, based on the continued rise in broadband customers due to the pandemic.
In the report, Moody’s noted that cable broadband subscribers grew by about 2.5% (3.5 million customers) in Q2, and market penetration rose to 50% in the period, compared to 48% in the prior year. This despite video and voice customer declines in the 4-6% range annually. Moody’s estimated that broadband is replacing video at a 1.9 times clip, rising to 2.2 times in Q2 for the first time in five quarters, a sign of future strength.
Although 5G wireless deployment could cut into wireline growth, the credit ratings agency noted that most operators are prepared to both defend against the threat and participate in the opportunity by expanding their footprints and purchasing spectrum.
"We believe the cable sector has less exposure than many others because voice and video subscriber losses have temporarily moderated, and there is much greater demand for residential broadband," Moody’s senior vice president Jason Cuomo said in the report. "Video viewership and engagement is rising sharply as subscribers spend extraordinary time watching TV news and entertainment programming."
Moody’s expects broadband subscribers to rise by at least 4% over the next 12-to-18 months, driven by demand for greater capacity and speed. Video customer losses are expected to rise beyond 5% over the same period, according to Moody’s.
