In what is becoming the cable equivalent of a broken record, Comcast reported yet another strong quarter on Wednesday, improving basic video customer losses despite an aggressive push by telco competitors in its service territories.
The nation’s largest cable operator finished the period down 159,000 video customers, an improvement over the 176,000 video subscriber lost in the same period last year. High-speed data customer additions also improved in the period to 187,000 versus 156,000 in the prior year. The company also added 161,000 telephony customer, up from 158,000 additions in 2012.
Those strong results helped push Comcast stock up 6% ($2.59 each) in early trading Wednesday to $45.29 per share. The stock closed at $45.08 each on July 31, up 5.5% or $2.37 per share.
On a conference call with analysts, Comcast Cable CEO Neil Smit said the improvement were driven by simple strong execution and the continued rollout of its X-1 next-generation video platform – there were no unusual promotions or other artificial catalysts in the period. What’s more, the growth came during a period when telco competitors – especially AT&T’s U-Verse product – expanded its reach by 1 million homes inside Comcast’s footprint.
That last point impressed Smit’s boss.
“The 1 million extra homes from RBOC competition does make the results even more impressive, in my opinion,” Comcast chairman and CEO Brian Roberts said on the call, We’ve all seen overbuilds and that first year is the hardest year.”
Smit said the X-1 platform, which includes a cloud-based user interface and IIP-enabled apps, is rolled out across 53% of Comcast’s platform and it plans to roll out seven more markets this week. In markets with the X-1 platform, Smit said video on demand views are up about 20%, and though it is still too early to tell, the company believes the platform also will have a favorable impact on churn. The X-1 platform should be rolled out across the country by the end of the year, with the newest version, X-2, coming to some areas before the end of the year.
“I think that really demonstrates the flexibility and nimbleness of having the platform the way it is,” Sit said.
Analysts were also impressed. In a research note, Moffett Research founder and senior analyst Craig Moffett noted that most of the consolidation talk in the industry surrounding Charter Communications, Time Warner Cable and Cablevision has been spurred by those companies’ desire to be more like Comcast.
“Where Comcast CAN lead is in operations, and… well, wow,” Moffett wrote in a note to clients Wednesday. “Comcast’s second quarter in the cable business was about as good as it gets. In a seasonally weak Q2, they lost fewer video subscribers than last year and gained more of everything else. Their margins were rock solid. Video revenues are growing and transport dollars per subscriber are stable. It’s hard to find a blemish.”
Although Comcast shares have missed out in the last few months as consolidation speculation has lifted the stocks of its peers, vice chairman and chief financial officer Mike Angelakis said on the call that will not change the MSO’s focus.
“You can tell by the results that we are really focused on executing our business plan,” Angelakis said. “We really think there is a lot of organic growth opportunity in the business.”
Angelakis said it looks at all opportunities – including the international market, which currently makes up about $4.5 billion of Comcast’s $65 billion in total revenue.
“We’re a bit underweight,” Angelakis said of international. “No. 1 we are really focused on running the business and executing our plan. No. 2, we remain very disciplined and we have these strategic and financial filters that we utilize for all M&A and No. 3 we want to make sure we are very well educated on what the market is in those kind of items .”