With broadband growth continuing to drive quarterly results, Comcast Corp. executives believe the company's innovation strategy is focused on broadband and broadband-enabled services.
The cable provider reported total high-speed internet customer net additions of 379,000, while video customer net losses totaled 238,000 in the third quarter. The broadband net addition is the highest third-quarter growth in 10 years.
Regarding Comcast's broadband strategy, "the key for us is to differentiate the product," said Comcast Cable CEO and President David Watson on an Oct. 24 earnings call. "And it's a combination of speed, coverage, control and now streaming with Flex."
CFO Michael Cavanagh noted that while video is still an "important, profitable component" of most customer relationships, it will not chase unprofitable subscribers.
Earlier this year, Comcast launched a streaming offering, Xfinity Flex, for internet-only customers. In September, the company announced that the product would be included with an internet-only subscription.
While CEO Brian Roberts acknowledged that the company is just now going to market with a free box to broadband-only customers across the entire platform, he said that "there's real innovation ahead on that platform."
Comcast has been "squarely focused across the entire enterprise on having a great broadband experience, and that's how we compete," Watson said.
Detailing the company's customer relationship strategy, Cavanagh said broadband is the foundation. The company attempts to "utilize additional products and services in a manner that profitably helps us attract and increase the lifetime value of the overall customer relationship."
Comcast's total revenue came to $26.83 billion for the third quarter, up 21.2% from $22.14 billion in the prior-year period. Within the cable communications segment, business services revenue increased 9.3% year over year to $1.97 billion and wireless revenue increased 38.1% to $326 million, reflecting an increase in the number of customer lines. Comcast ended the period with 1.79 million wireless customer lines, reflecting 204,000 net additions in the third quarter.
Comcast reported net income attributable to the company of $3.22 billion, or 70 cents per share, compared to net income of $2.89 billion, or 62 cents per share, in the year-ago period.
The S&P Global Market Intelligence consensus EPS estimate for the quarter was 67 cents on a GAAP basis and 74 cents on a normalized basis.
Capital expenditures for the company as a whole increased 5.3% year over year to $2.5 billion in the third quarter. At the cable communications segment, capital expenditures decreased 6.7% to $1.8 billion in the third quarter.