Q4 '25 Earnings - AT&T, Verizon, Comcast, & Charter - Convergence Takes Center Stage

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and eighty first episode of the week with Roger, conversation between analysts about telecom, media, and technology by Recon Analytics. I'm Don Kellogg, and with me as always is Roger Entner. How are doing, Roger?

Roger Entner 0m23s

I'm good.

Don Kellogg 0m24s

So, Roger, it's earning season again. These are some of our most popular shows. So this week, we had AT&T, Verizon, Comcast, and Charter Report. So I thought we could start with AT&T. How'd they do?

Roger Entner 0m38s

They did pretty well. I would say they were within the ballpark of where they should end up. Postpaid, they did pretty well. Postpaid net adds, six forty one. The phone net adds, four twenty one.

Roger Entner 0m53s

They continued on their pace for home Internet. We're a little bit weaker than expected on FWA, but made more than half a million subscribers on broadband. And John Stankey announced that he's gonna double down on fiber, which makes a lot of sense because their fiber is awesome. And when they have fiber, they win because happy people bundle. Bundling doesn't make people happier.

Roger Entner 1m20s

And so it's these happy fiber customers that are easy conversions to that. And we will see this theme come through over and over again. You know, there's a preview. Dan Schulman and Verizon said basically the same thing. Carl and Comcast have also basically the same thing.

Roger Entner 1m40s

I did a lot of work over the holidays on what's the new drug because handset subsidies are no longer working. We should all realize that. Convergence is the new drug that drives this. And so everybody will double down on happy customers.

Don Kellogg 1m57s

That being said, the handsets were good too, though. I mean, their upgrade rate was 4.7%, which is tick over where it was last year. So it's not terrible. And we saw that across some other carriers too. So this is a good cycle for handsets.

Don Kellogg 2m10s

And, you know, typically, we see good deals for handsets in q four. Turn ticked up a little bit too.

Roger Entner 2m15s

But when you do online for how this was five years ago, you see the line coming down. Right?

Don Kellogg 2m22s

Well, the line comes down, but it always jags up in q four. Right? That's my point.

Roger Entner 2m25s

Yeah. Because of the new iPhone. Right? And so that's what's happening. But still, it's not the 10% upgrade rates that it was in the past.

Don Kellogg 2m34s

I don't think we're ever getting back to 10% upgrade rates.

Roger Entner 2m37s

Yeah. And it's pretty high on ridiculous promotional values. They are making the promo richer and richer just to come out of evil. And that's the thing, that drug is no longer working because you need to incentivize the people to take new phones to absurd levels. And everybody should agree on it, and it's a zero sum game for the operator.

Roger Entner 3m1s

And, you know, you have Capital Hill saying, oh, carriers are unaffordable. Well, yeah, because they give away $1,215,100 dollar handsets. Doesn't come out from nowhere. It's so unaffordable that they give away these handsets. That's at least the logic of Cantwell on Capitol Hill.

Roger Entner 3m20s

Anyway, let's focus on earnings. They had a good quarter. Not blow out of the ballpark, good quarter. A good quarter.

Don Kellogg 3m29s

Decent quarter. Yeah. Alright. So let's shift gears to Verizon. How'd they do?

Roger Entner 3m33s

Verizon on the net add side had, like, the best net adds in, like, I think 2019 or something like that.

Don Kellogg 3m41s

Yeah. Five or six years.

Roger Entner 3m42s

Yeah. But with the most generous offers in much longer than that, if ever. And they guided that subscriber ads will be up for this year, but revenue will not be, which basically tells you they realize that they need to become a better value play. I think Dan is right from that perspective. Yeah.

Roger Entner 4m7s

On consumer first retail net ads were, like, eight forty. Postpaid phone was five fifty one. Really, really strong. Business also did pretty well. Business did 65 on the postpaid phone side.

Roger Entner 4m23s

I think this is about for Dan to reset the theme in the company and to do this really, really well. And so I think he's setting it up. One of the interesting things is they're gonna cut, as I expected, CapEx by a billion dollars. And even then, Dan said, like, I don't know if we need all of that. I think he will need all of that because he will wanna have the baseline of fiber.

Roger Entner 4m50s

But right now, you know, in Frontierland, the bundling opportunity is just very significant.

Don Kellogg 4m55s

Right. They have 30,000,000 homes passed now, right, with fiber. So Yeah. That's a huge jump. And per your earlier comments, bundling is the name of the game.

Don Kellogg 5m5s

Right? They also saw a big uptick in terms of upgrade rate. But when you're offering, you know, four devices for a $100, I mean, who's not gonna take that deal?

Roger Entner 5m14s

They threw in the kitchen sink. Right? Mhmm. And then if we look at Comcast, the home Internet losses were a little bit bigger than expected. They did really well on mobile.

Roger Entner 5m26s

Again, monetizing on their happy customers. And also working on resetting the playbook of doing this right. They added

Don Kellogg 5m35s

364,000.

Roger Entner 5m36s

364,000. That's pretty decent, but they're chugging along. From everything I see, Comcast got the message. Charter had also an interesting quarter. Right?

Roger Entner 5m49s

Again, home Internet connectivity losses, wireless gains. You know, they were all like, oh my god. They added video. And on the earnings call, like, one of the analysts asked, like, how sustainable is this? On video, what it is, we're now down to the level where people are tactically turning on and off the video subscription to watch the NFL.

Roger Entner 6m14s

That's why in q four, the videos came up, added, like, what was it, 44,000. These are the people who wanna watch the NFL, and Charter was, like, the cheapest way to do that. Congratulations. Come February, they're gonna cancel it again. They care about the NFL.

Roger Entner 6m30s

That's it. Because that's the number one thing that people watch in television nowadays. What I was very encouraged by is that Chris Winfrey, that historically called FWA cell phone Internet, is actually calling it FWA. Because calling this cell phone Internet is like describing the buprenic plate as, oh, it's just a skin rash. No.

Roger Entner 6m54s

This is serious stuff that really eats at you, and you need to take it seriously. And, you know, words matter, and them addressing it the way it is rather than downplaying it and delivering it shows that this has now sunk in. I thought that was, like, really important. So, yeah, it's a really interesting quarter.

Don Kellogg 7m15s

Yeah. They also had an interesting footnote on the report where they revised the way that they're talking about wireless lines, and they're now including folks that are wireless only. So for example, you can have Charter Internet and then add a wireless line to that and then drop the Internet and keep the phone line. And so they're reporting those folks with a penalty, and there's about 64,000 folks that have done that, alright, that did that in q four. So as you see those broadband numbers coming down, some of those folks are still with Charter on mobile lines.

Don Kellogg 7m50s

So I thought that was an interesting viewpoint into how those two parts of the business are going in different directions. Right?

Roger Entner 7m56s

Yeah. Absolutely.

Don Kellogg 7m58s

Alright.

Roger Entner 7m59s

We have, like, now a low a little bit next week because T Mobile is reporting on the tenth from their Capital Markets Day, and I'll be there. It should be fine.

Don Kellogg 8m9s

Alright. Well, maybe we'll get some T Mobile folks on to talk about that. Maybe. Alright. Talk to you soon.

Roger Entner 8m16s

Thank you. Bye.