Britt: Customer Metrics Looked Stronger in August9/14/2011 2:55 PM Eastern
Time Warner Cable chairman and CEO Glenn Britt said that growth across its three product lines was stronger in August, but that economic pressures will still continue to weigh on subscriber performance.
Britt said at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference in Beverly Hills, Calif., Wednesday that Primary Service Unit growth, a combination of video, voice and data customers, was stronger in August and that the full year should be better than 2010.
"We're doing a lot better than we thought back in the second quarter," Britt said.
But third quarter PSUs will continue to be weak, offset by a strong fourth quarter he added.
"So as you look at the third and fourth quarter year-over-year growth, you're going to see a relatively low number in the third quarter, which actually will be the lowest of the year for us, and the fourth quarter is going to be relatively higher, the best of the year. The year is going to be OK," Britt said.
That is in sharp contrast to last year at the conference, when then-TWC chief financial officer Rob Marcus warned that PSUs would breach negative territory for the first time, a revelation that sent the stock into a tailspin. Marcus was named TWC chief operating officer in December.
While the residential business will still be impacted by the housing slump and high unemployment, Britt was more enthusiastic about the business services segment. Sales to small and medium sized business increased about 20% in the second quarter and Britt expects that pace to continue for the foreseeable future.
Part of his optimism is the sheer size of the market - he estimated that total telecom spend in Time Warner's footprint to be about $20 billion. Last year, TWC reported about $1.3 billion in business services revenue.
"We're very small and there hasn't been a lot of competition," Britt said. "We think the sector can grow."
Britt also touched briefly on Time Warner Cable's recent purchase of Insight Communications, adding that the company's strategy to sit out of the Insight auction process may be the norm going forward. Time Warner Cable did not participate in the five-month Insight auction, but began negotiations in July after that process produced no clear winner.
"We're only going to do M&A if we are sure we can generate a great return for the people who own the company," Britt said. "That means we will rarely, maybe never, win an auction."
The Time Warner Cable chief added that future acquisition targets need not be contiguous to existing Time Warner properties,
"The industry is pretty well clustered now," Britt said. "I think that a well-run property that we could buy at the right price doesn't have to be right next to our footprint."