Comcast Takes Broadband Share

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Comcast kicked off the second-quarter cable earnings season with a bang, reporting strong results and alleviating fears that the broadband market was slowing significantly.

A week after sluggish high-speed Internet growth results from its telco rivals caused some analysts to speculate whether the broadband market was being affected by the weak economy Comcast’s results provided the answer: cable is taking up the slack.

“As it turns out, the telcos’ loss has been Comcast’s gain,” Sanford Bernstein cable and satellite analyst Craig Moffett said in a research report. “Cable is taking share and it is taking it in gulps.”

Comcast’s strong performance seemed to lift at least some of the pallor from the cable sector – its stock was up $1.24 each (6.5%) to $20.41 in early trading Wednesday. The results also appeared to lift the rest of the sector – Time Warner Cable shares were up 4.8% ($1.28 per share) to $27.83 in early trading, followed by Cablevision Systems (up $1.08, or 5.2% to $21.74 each); and Mediacom Communications (up 5.95%, or 34 cents, to $6.05 each) and Time Warner Inc. (up 14 cents each or 1%, to $14.71 each). Charter Communications was down 1 cent per share to $1.14 each in early trading.

Comcast added 278,000 high-speed data customers in the quarter, not spectacular but representing 75% of the broadband market reported so far, Moffett wrote.

Last week Verizon reported 54,000 net broadband additions in the second quarter (187,000 FiOS Internet customers offset by the loss of 133,000 DSL subscribers) and AT&T had just 46,000 high-speed data additions.

“A year ago, Comcast captured 38% of the broadband net additions reported by the ‘Big Three,’” Moffett wrote. “When the book is closed on Q2 reporting, cable will likely have gained 85%-90% of the broadband net additions.”

Comcast also outperformed on the telephony front, adding 555,000 voice subscribers in the period. The cable giant also added 320,000 digital-cable subscribers in the period. Comcast lost 138,000 basic subscribers in the quarter, but that was in line with expectations given the seasonal nature of the period.

On the financial front, Comcast reported revenue of $8.6 billion, an 11% increase, and operating cash flow rose 11% to $3.4 billion.  

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