Q2 '25 Earnings from Cable Giants Charter and Comcast

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and fifty fifth episode of the week with Roger, conversation between analysts on all things telecom, media, and technology. I am Jay Cockridge. And once again, I'm filling in for Don Kellogg. For our many Don fans out there, fear not. He'll be back in the saddle next week.

Don Kellogg 0m27s

And joining us, as always, is Roger Ender. Roger, how are we doing?

Roger Entner 0m32s

I'm good. Hey. I love having you here. I love Don. I love having you here.

Don Kellogg 0m37s

Oh, I love it.

Roger Entner 0m38s

As I always say, like, I have the privilege of working with the best people I've ever worked with, both as human beings and professionally. So, you know

Don Kellogg 0m49s

I can second that. Having been with you for a couple of years now, Recon is really a great place to work. And this week, we are going to be tying up the quarterly reporting conversation now that Charter and Comcast have both come in. As is tradition on this podcast, we'll go in the order of when they reported. And so we'll start with Charter, who came in with a 117,000 broadband losses, but 500,000 net adds on the wireless side.

Roger Entner 1m18s

Yeah. It wasn't pretty. It was to be expected, but it wasn't pretty. And they got beaten up by the market. I think they got beaten up more than what they deserve, but I think it was a little bit excessive.

Roger Entner 1m35s

But we're seeing the same trend play out, right? Where FWA and fiber eats into broadband, well, into cable. And cable eats into the expansion markets that they do. It's like a fish eats fish eats fish. And so one of the things you have to understand is Comcast and Charter, but especially Charter, is constantly expanding.

Roger Entner 2m3s

They won a lot of RDOF markets where they get subsidized to expand into underserved markets. And that's where, by the way, Charter is building out fiber, right? And they are winning in these out of markets left and right. Because it's by far the superior solution with fiber where they go after typically DSL. And so they win big there.

Roger Entner 2m29s

And then in their cable, in their HFC, hybrid fiber coax market, they again also lose pretty big against both fiber and against FWA. And that is not going to change. It's definitely not going to change as long as they call FWA cell phone internet, right? If you don't take your your enemy seriously, and if you don't show respect, they have a tendency of doing bad things to you. Take your enemy seriously.

Roger Entner 2m59s

At the same time, they're eating with low cost mobile into the wireless market. And they are kicking butt, right? It's a fantastic offer. I just think that the market overreacted of how they beat up Charter.

Don Kellogg 3m15s

Yeah. I mean, the 500,000 net adds on the wireless side, it's nothing to sneeze at. It's an impressive number.

Roger Entner 3m22s

It's leading. Yeah. It's industry leading. Well, it's definitely leading when you consider they are only doing this on 40% of the country. Right.

Roger Entner 3m31s

Like high 30s it is, right? Yeah. If they would compete nationwide, they would be north of a million. They make T Mobile's very impressive performance in mobile look puny.

Don Kellogg 3m45s

Yeah. But they're still bleeding customer relationships, right? So

Roger Entner 3m48s

Yeah. But also what you're seeing here is that cable gets a bad rap because it has a low NPS score. But when you look at it, a third of their customer base loves them. A third of their customer base rates them nine and ten on an NPS score. The problem is a third of their customer base also hates them with a vengeance.

Don Kellogg 4m9s

Right.

Roger Entner 4m10s

And those are the ones who are running to the exit, and the ones who love them are signing up for wireless.

Don Kellogg 4m15s

Right. The thing is is we look at the financial numbers and they're continually raising ARPU, right? They're getting more out of the same dwindling customer pool. Yeah. And having come from having cable, you know, the service was not the problem.

Don Kellogg 4m31s

It was the fact that my bill kept going up that made me leave.

Roger Entner 4m34s

Yeah. And so congratulations, you're getting more and more out of people. Congratulations, they hate you more and more. Maybe there's a cause and effect. I don't know.

Roger Entner 4m43s

What do you think? It's the same pitfall that Verizon is falling in that is also getting more and more money out of fewer and fewer accounts. They're adding lines because they are convincing the same number of people or a lot of people to add more lines and give them more money and congratulations. But at the same time, that's in a way the root of the churn issue. Not that it's that big of an issue, right?

Roger Entner 5m8s

We're talking about like 0.1%, but still that's one of the root causes.

Don Kellogg 5m14s

Yeah. And it's on a large base.

Roger Entner 5m15s

And it's on a very, very large base. And then when you have a very large base, then everything counts even in small amounts. Challengingly my inner Depeche mode here. Right?

Don Kellogg 5m27s

Let's flip over to Comcast who lost 226,000 on the home broadband side. But wireless net adds up 378,000, which is their best quarter ever.

Roger Entner 5m40s

So here, Comcast objectively worse numbers. I just look at the stock price and it's actually up. What gives, right? Maybe it's just because Charter walked that gauntlet first and it got like whipped to pieces, whereas all the bears, all the haters were like out of power when it comes to Comcast. Comcast is a little bit more.

Roger Entner 6m5s

There's like the video business and the theme parks, but still, it's fundamentally not that much of a different story. The bread and butter still is connectivity.

Don Kellogg 6m16s

Right. Then the video losses keep coming, right? It was 325,000 this quarter.

Roger Entner 6m21s

Another 10%, right? Right. If you draw a line like this, you know, in ten years, there's nothing left. That's the other scary part here, right? When you look at it, the video losses are like just like nobody's adding it.

Roger Entner 6m35s

And the sad part is, I think you looked at the peacock. I don't know what that whole obsession is in the cable industry with cocks and peacocks and all of that stuff. I have no idea. It's like you

Don Kellogg 6m51s

I can't answer that one.

Roger Entner 6m52s

And I don't wanna know the answer, but there's certainly some fascination going on. Right? You know, at least subconsciously, you know. If they only would stop acting like it, right, their customers would be a lot better. Peacock, did it have net ads?

Roger Entner 7m9s

I don't think so.

Don Kellogg 7m10s

It was flat.

Roger Entner 7m10s

It was flat, right? It's like nobody's showing up to live on a television anymore, but we knew that.

Don Kellogg 7m17s

Right. I mean, I think it's got a steady base that it will keep

Roger Entner 7m20s

Until they die. Yeah. Literally. Right?

Don Kellogg 7m23s

Reality. Right? And and I think as soon as streaming can figure out the local sports relationships, it's gonna be another big hit.

Roger Entner 7m31s

Exactly. But right

Don Kellogg 7m32s

now, that's one of their big draws. Right? If you wanna you wanna watch the Red Sox in Boston, get to it on YouTube TV.

Roger Entner 7m38s

And, you know, what is it? 99 out of the top 100 most watched things is sports, and the other one is like the Oscars? Yeah. Okay. You know, and the funny thing is the people who go to the movie theater are not the ones who are watching the Oscars.

Roger Entner 7m55s

People of older age are watching the Oscars. And the people who are going to the movies are 16 years old. That disconnect is like also mind blowing, which is like a similar disconnect. You know, when you look at the music industry, like when they still sold like physical stuff and they did the singles charts, you know who controlled the singles charts?

Don Kellogg 8m18s

I don't.

Roger Entner 8m19s

12 year old girls buying singles. That's literally you were listening to the taste of 12 year old girls. And there's nothing wrong with it, but it explains a lot of top 40.

Don Kellogg 8m32s

Good music on there, but yes.

Roger Entner 8m34s

But sometimes some of it is awesome music and some of it is like I scratch my hat. You know? I'm like, really? So coming back to Comcast, you know, it had the mercy of a late reporting. It should teach you that if you have questionable numbers, you don't wanna be first to get, like, beaten up.

Roger Entner 8m51s

But it's the same fundamental problem. Right? And I thought that Comcast did a better job with the new pricing, and it didn't help.

Don Kellogg 9m1s

Right.

Roger Entner 9m1s

But then when you've beaten up your customers for decades and then, you know, you pledged not to do it anymore, really? Yeah. But we only beat the new customers anymore. The old customers get the same exploding prices.

Don Kellogg 9m17s

The other piece too, if you wanna get their best deals, you can only lock in the rate for a year. You know, there's tiers to the way they did that pricing guarantees. It incentivizes you to not take that five year guarantee. So it's an improvement, but some of the same old tricks.

Roger Entner 9m33s

The same old, if you want me to be less greedy for five years, you still have to pay me more, right? Otherwise, we'll make you go call customer service and have to fight tooth and nail so that you can get that deal extended and then maybe not, right?

Don Kellogg 9m50s

Same old game.

Roger Entner 9m51s

Same old game and people are tired of it. And with FWA, it's the same price basically. You know, we're not going to check up the prices. Asterisk, because the wireless carriers have played this game too. But not as much, right?

Roger Entner 10m6s

And that shows a difference. And some people are just sick and tired. They want to have something else.

Don Kellogg 10m11s

Certainly.

Roger Entner 10m12s

I wanna have a new drug because the old one doesn't work anymore.

Don Kellogg 10m15s

Yeah. The one other topic I wanna touch on, it's really across both Charter and Comcast is the business relationships, right?

Roger Entner 10m23s

Where they're

Don Kellogg 10m24s

both losing business customers. Charter was down 8,000. Comcast was down 24,000. And so it'll be interesting to see with this new MVNO deal with T Mobile and the expanded offerings that we expect to come with that for both of these cable companies if that trajectory will change.

Roger Entner 10m43s

Yeah. But also, have to look at it. Right? Comcast has about 50% market share in, like, small medium business in their footprint. Charter, about 40.

Roger Entner 10m55s

So this is a very big ice cube that's melting here. But the important part, it's melting. The telcos like AT&T and Verizon, they are under a lot of pressure because their spend in their business comes from larger enterprises who rationalizing things. They're taking away the desk phones. They're taking away old MPLS lines and all of that stuff.

Roger Entner 11m23s

Here the concerning part is this is businesses, right? So businesses are getting rid of their HFC, of their cable connection. That's what it is. Because they don't have mobile connection from the cable guys yet, right? So we'll see how that insulates.

Roger Entner 11m40s

But this is what shows me business FWA is hurting cable. Or at least it's a mosquito that is stinging them and they might get malaria. And so we'll see if they get malaria and that this stuff is accelerating. Because it's like if I would be the telcos, my reaction to the wholesale deal that Comcast and Charter did with T Mobile would go double down, you know, pedal to the metal, FWA sales. Yep.

Roger Entner 12m13s

Bang here. Oh, cable, how much do you pay? Okay. With us, it's $5 less. Right?

Roger Entner 12m20s

Bang. How do you like me now? And we'll bundle it with your mobile. Exactly. Simple, unified solution.

Roger Entner 12m26s

Simple, unified solution. Oh, and it's really easy. And you know what, mister bakery guy or cafe or you name it, when you're closed on the weekend and you wanna go to your vacation home, you know, you're not supposed to, but why don't you take it with you? And then you have FWA on your vacation home.

Don Kellogg 12m48s

You said it, not me. But

Roger Entner 12m49s

Exactly. Don't ask, don't tell. Right? And then you bring it back home, back to your your place of work. How about that?

Roger Entner 12m58s

Yeah. And they're like, yeah. You know, my Internet's my Internet is not great on The Cape, Cape Cod.

Don Kellogg 13m4s

Two Boston references or Massachusetts.

Roger Entner 13m6s

Yeah. Two Boston references. Right.

Don Kellogg 13m8s

That's the trouble when you get us both on.

Roger Entner 13m10s

Yeah. By the way, when you look at in Barnstable County, Massachusetts, which is like on The Cape, it's like Hyannis in that part at the beginning of The Cape, Fios has like the worst NPS scores. It's like atrocious. So fiber can also deliver really, really poor results depending on how you build it. And so it's not only like, hey, I don't have cable at my vacation home.

Roger Entner 13m34s

Maybe I don't have any internet connection at my cable home, but I'm gonna take my laptop and okay, take your FWA box. My pork. Anyway.

Don Kellogg 13m43s

Yeah. I think that wraps it for us. Yeah. Roger, have a great week. And once again, Don will be back next week, but I'm sure this isn't the last you'll hear of me on the week with Roger.

Roger Entner 13m54s

Oh, I'm sure. No. We we you you're gonna tell us a lot more stuff about what you actually work on, you know, because you work on some of the coolest stuff that we have here.

Don Kellogg 14m4s

I would love it. Alright. Thanks a lot, Roger.

Roger Entner 14m6s

Thank you.