Cable Update: Altice, Charter, Comcast, Shaw Increased Business Revenue in Q2

By | Managed Services News

Aug 02

COVID-19 hit business-focused connectivity sales hard. That could be changing now.

Demand for business broadband is rebounding, and that’s good news for channel partners.

Cable companies hemorrhaged business customers in the face of pandemic-related office lockdowns, but customers seem to be returning in 2021. Second-quarter results show commercial services bouncing back into the positive after a brutal 2020.

Business Storms Back

Consider the latest earnings reports from publicly traded U.S. operators. Comcast reported last week that that its second-quarter business services revenue increased almost 10%, from $2 billion last year to $2.2 billion in 2021. Moreover, Comcast’s business revenue stands 8% higher at the halfway point of the year compared to the first half of 2020. After suffering a staggering net loss of 24,000 business customers in 2020’s second quarter, Comcast saw a net gain of 17,000 in last quarter.

WInfrey, Chris_Charter

Charter’s Chris Winfrey

Charter also reported business growth. Commercial revenue was up 5.6%, from just shy of $1.6 billion in the second quarter of 2020 to almost $1.7 billion last quarter, with SMB revenue increasing by 6.3%. Charter chief financial officer Chris Winfrey said the company’s enterprise selling activity has returned to 2019 levels despite key metropolitan areas operating with restrictions. In addition, he said many enterprise deals have started but will take a long time for installation and billing.

“… as more businesses become occupied … the selling opportunity for us increases and the willingness for people to take decisions on their IT network, including our services increases … So enterprise selling opportunities should continue to get better,” Winfrey told investors and analysts on an earnings call.

Goei, Dexter_Altice USA

Altice USA’s Dexter Goei

For some companies, business growth paired with flat residential performance. For example, Altice USA‘s business services revenue increased from $366 million a year ago to $372 million in the same quarter this year (up 1.8%). In the meantime, Altice’s residential revenue growth was essentially flat. Similarly, Shaw saw a 3.6% business revenue increase and slightly less than 1% decrease in consumer revenue.

Altice USA CEO Dexter Goei said industries like restaurants, theaters and health spas opened “more widely” last quarter.

“We still see higher-than-normal retail and commercial office-based vacancy rates, which means many businesses are still missing, but the situation is improving,” Goei said, pointing to the impending return of K-12 and college students to campus.

Technology Trends

Video revenues tend to be declining across the board, especially on the residential side. For example, Comcast has dropped 1.4 million video customers (residential and business) from where it was a year ago, and Charter in the second quarter suffered a net loss of 63,000 residential video customers. But in some cases, cablecos found value in business video. Charter enjoyed a net gain of 13,000 business customers in the second quarter.

Charter SMB additions

Source: Charter Second Quarter 2021 Results

In many cases, cablecos offset video losses with growing voice practices. Comcast, which lost business video customers, increased its number of business voice customers from 1.3 million in Q2 2020 to nearly 1.4 million in Q2 2021. On the other hand, Comcast’s residential voice customers shrank.

Chris Winfrey pointed to “value-added” services that help drive connectivity sales. That includes unified communications and SD-WAN.

“And so our opportunity there is not only to provide more fiber connectivity, but to establish ourselves in the marketplace for these additional services and increase the stickiness of our fiber connectivity with additional product, and we’re early on in that,” Winfrey said.

Irwin Lazar, president and principal analyst for Metrigy, said cable companies face a significant opportunity in addressing remote work. That’s both delivering connectivity to home-based employees and also securing the expanded attack vector. But Irwin said cablecos have continued to put the majority of their eggs into …

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