Comcast chairman and CEO Brian Roberts offered some more details on the company’s plans to offer commercial telephone service, adding that the nation’s largest cable operator will initially target businesses with fewer than 20 employees.
At the Citigroup Entertainment, Media & Telecommunications conference in Las Vegas Tuesday, Roberts estimated that there are about 5 million small and midsized businesses with fewer than 20 employees within its footprint, representing a revenue opportunity of $12 billion-$15 billion annually.
Roberts said Comcast believes it can capture at least 20% of that market in five years, adding that the MSO would spend about $3 billion during that period to do so. The company intends to spend about $250 million of that capital budget in 2007.
Roberts added that he anticipates operating-cash-flow margins of 50% or higher for business services. He estimated that in five years, if it achieves its goals, the business-telephone sector could contribute $1 billion in operating cash flow per year.
“This has a meaningful impact for the growth rate of the company for the next five years,” he said.
Roberts was buoyed by the strength of Comcast’s residential voice product, which, when coupled with video and data service, has lifted basic-subscriber growth. In addition, Roberts said, Comcast was ranked No. 1 by Yankee Group on Internet service to small and midsized businesses, so the operator already has an inroad to those customers for phone service.
“We think this is a natural extension of the network we’ve already built,” he added.