Comcast Cable Unit Growth Aided By Broadband Strength, Execs Say

Comcast continues to dominate with its ‘connectivity-centric’ portfolio, but the cable giant also has plans to grow in new areas, such as streaming video and security, executives say.

2020 will be a year of "connectivity-centric" focus, coupled with a few investments in new areas, including advanced security and streaming video, said Comcast Chairman and CEO Brian Roberts.

Like its telecom competitors AT&T and Verizon, Comcast has also pursued new media assets, including British pay TV provider Sky, which it bought in 2018. Comcast said it won't chase after video customers leaving for streaming services, but it expects its brand-new streaming service Peacock, which is due to hit the U.S. market in April, will be a significant driver in growth as the cable giant's video segment weakens.

"We have all the pieces in place for long-term success," Roberts told investors during the company's fourth-quarter 2019 earnings call Thursday morning. "Our guiding principles remain the same: be leaders in our markets, continuously improve our products and experiences, and build deep, highly-valuable, customer relationships."

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Comcast's Cable Communications unit -- which includes high-speed internet, voice, video, wireless and business services -- continued to shine during the company's fourth quarter. The segment rose 2.6 percent and generated revenue of $14.77 billion, up from $14.39 billion in the last quarter of 2018. Comcast said those gains primarily were driven by increases in high-speed internet, customer net additions, and continually increasing business services.

High-speed internet rose 8.8 percent to $4.79 billion, up from $4.40 billion a year ago. For the fourth-quarter 2019, Comcast added a total of 442,000 net-new high-speed internet customers -- a 26 percent increase over the prior year -- with residential customer relationships increasing by 352,000 and business customer relationships growing by an additional 20,000. The bump-up in customer adds marks Comcast's best fourth-quarter in five years, according to Roberts.

Cable's financial results reflect Comcast's continued focus on its high-margin connectivity businesses, including business services, said Michael Cavanagh, Comcast's senior executive vice president and CFO, during the call.

"We believe that our consistent and ongoing investment to extend our leadership in broadband, through speed, coverage, control, and now streaming, as well as through security and privacy, is unique among our competitors," Cavanagh said.

Comcast's business services revenue jumped 8.8 percent to $2.00 billion in the fourth quarter compared with $1.89 billion in the same quarter a year ago. The carrier has been working to expand its relationships with business customers through value-added services, such as wireless backup and SD-WAN. The company's business growth was driven by a 4.1 percent increase in business customers year-over-year and a 4.3 percent increase in revenue per business customer, thanks to new offerings such as Comcast Business WiFi Pro and SecurityEdge.

Philadelphia-based Comcast also attributed some of the strength of its cable portfolio to Xfinity Mobile, its wireless service that was introduced in 2017, thanks to the addition of more customer lines. Xfinity Mobile posted revenues of $372 million, up 39.4 percent from last year's fourth-quarter result of $267 million. Xfinity Mobile's growth for the full-year 2019 was 31.2 percent.

As Comcast expected, voice revenue continued its decline, falling to $944 million in fourth-quarter 2020 from $987 million during the fourth quarter of 2018. Comcast's video business also continued its downward trajectory, dipping 1.2 percent in Q4 2019. Sky, however, brought in $5.04 billion in revenue during the fourth quarter, a slight increase of 0.4 percent compared to a year earlier.

For the quarter ending Dec. 31, Comcast beat 2018 Q4's $27.85 billion, reporting $28.40 billion, a growth of 2 percent year over year. Net income in the quarter was $3.16 billion, growing 25.9 percent from last year's fourth quarter's ending balance of $2.51 billion. The cable giant posted adjusted earnings per share of 79 cents, up 7 percent, compared with 72 cents per share for the last quarter of 2018.

For the full 2019 year, Comcast reported revenues of $108.94 billion, up from $94.51 billion in 2018, marking a 15.3 percent growth. Net income rose 11.3 percent to $13.06 billion from $11.73 billion in 2018. Roberts called 2019 one of Comcast's best years on record.