Comcast reaps as price war fails to materialise
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Comcast, the largest cable operator in the US, on Thursday offered further evidence that strong competition among cable and telecom providers of high-speed internet connections is not yet pushing prices down.
Comcast said that in its second quarter the average revenue made from each broadband customer rose to $43.78 from $43.35 a year ago.
“Broadband bears have been predicting a price war in broadband for more than two years, and the ‘just wait’ arguments are wearing thin,” said Craig Moffett, analyst at Sanford Bernstein. “Consistent with comments from [telecommunications companies] AT&T and BellSouth this week, both of whom saw strength in higher-speed internet tiers, the action in broadband seems to be at the high end, not the low end, of the market,” he said.
Comcast’s shares rose 5.2 per cent by midday in New York to $34.21. The company, run by Brian Roberts whose family has control over the group, has seen its shares rise 32 per cent this year, making it the sixth-biggest riser in the S&P 100 index of US companies.
As well as strong results across its cable television and internet businesses, Comcast was beginning to benefit from the extended roll-out of telephony services.
Cable rivals Cablevision and Time Warner Cable, which have rolled out telephone services more rapidly than Comcast, have been able to retain more customers and even lure back some from satellite rivals by offering a bundle of services including television, internet and telephone.
So far, about 25 per cent of Comcast’s customers are offered a “triple play” bundle of services. This will rise to close to 60 per cent by the end of the month and increase from there.
Comcast management raised its guidance for earnings before interest tax depreciation and amortisation for this year to at least 13 per cent growth versus previous guidance of 10-11 per cent.
The strength of demand and profitability of broadband services, combined with the appeal of bundled packages, is putting pressure on satellite rivals DirecTV and Echostar to find a way to provide similar products.
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