Cable One Inc. is going all-in on its broadband-first strategy by discontinuing some of its video offerings and focusing on its most popular broadband services.
As part of a strategic focus on high-speed data and counting cash flows rather than customers, Cable One decided in the fourth quarter of 2021 to begin discontinuing its bulk cable video offerings, said Cable One CFO Steven Cochran during the Feb. 24 earnings call.
"Whether it's condos, hotels, those types of businesses, we don't have a competitive product and it's not a financially viable business for us. So exiting out of that isn't really changing our video strategy around residential," said Cochran.
The company also announced it will discontinue its 100 Mbps speed tier due to low demand. Current 100 Mbps customers will be migrated to the 200 Mbps speed tier in the first quarter of 2022 with an initial $5 monthly upcharge.
"We believe we are ensuring an experience that lives up to our customers' expectations while also maintaining a great value proposition," said Cable One CEO Julia Laulis.
Laulis estimated that 22% of the company's residential hybrid fiber-coaxial customers currently have the 100 Mbps tier and will need to be upgraded. Hybrid fiber-coaxial networks combine optical fiber and coaxial cable.
At the same time, the company is investing more heavily in pure fiber-to-the-home deployments through the expansion of Clearwave Fiber, a joint venture transaction in which Cable One contributed some of its Clearwave and Hargray fiber assets. Cable One completed its acquisition of Hargray Fiber in May 2021.
"Clearwave Fiber intends to invest heavily in bringing fiber-to-the-premise service to residential and business customers across its existing footprint and in near adjacent areas," Laulis said.
Cable One ended the fourth quarter of 2021 with 247,000 residential video customers, slightly less than the 248,000 customers reported in the fourth quarter of 2020. Residential data customers grew to 957,000 in the fourth quarter of 2021, a 23.2% increase from 777,000 in the same quarter of 2020.
For the fourth quarter, Cable One reported net income of $64.8 million, or $10.54 per share. The S&P Capital IQ consensus EPS estimate for the quarter was $11.77 on a normalized basis and $11.96 on a GAAP basis.
Total revenues were $432.6 million in the fourth quarter of 2021 compared to $336.8 million in the fourth quarter of 2020, an increase of 28.5%.
