Comcast Q3 Revenue Gets Boost From Business Services, High-Speed Internet Units

Comcast Tuesday reported revenue of nearly $18.7 billion for the third quarter ended Sept. 30, an 11 percent increase compared with the $16.79 billion reported for the third quarter of 2014, according to Comcast CEO Brian Roberts. Roberts said on the earnings call Tuesday that the growth was fueled by Comcast's fast-growing high-speed Internet segment, Business Services division and film business.

Wall Street had expected Comcast to report a year-over-year decline in earnings per share but an increase in revenue. Analysts had estimated earnings of 80 cents per share and $18.02 billion in revenue for the latest quarter. Comcast beat revenue expectations and met earnings per share expectations, hitting 80 cents. This is a decrease from the 99 cents reported in third-quarter 2014, which was the result of a one-time $724 million, or 28 cents per share, benefit due to favorable income tax adjustments, according to the company.

The Philadelphia-based company's earnings were anchored by a 19 percent revenue increase in the quarter in its Business Services division and a 10 percent revenue increase in its high-speed Internet segment, both beating Wall Street expectations.

[Related: The Role Of The Cloud Broker: Solution Providers Have The Inside Track]

Comcast's Business Services revenue jumped 19.5 percent in the third quarter to $1.21 billion. The unit has been the second largest contributor to cable revenue growth for 18 of the last 19 quarters, said Comcast's new CFO, Mike Cavanaugh.

"Business Services delivered another excellent quarter. … We continue or progress in small business, have established ourselves as a competitor in the midsize segment, and recently announced our new Enterprise Services Group targeting Fortune 1000 customers," Roberts said during the earnings call, noting that this division already has seen "good, early success."

"Over 70 percent of [Business Services] revenue is driven by small businesses where our performance is especially strong, with growth driven by customer additions and higher rates," Cavanaugh said. "At the same time, the contribution from midsize businesses continues to increase. We feel great about our runway from growth for Businesses Services. Even more so with the recently announced Enterprise division."

The requirements of the enterprises Comcast is now targeting -- large businesses with branch locations such as banks, restaurants and retail chains -- have needs that look like those of the small and midsize businesses the carrier is already serving, he said.

"The [enterprise] opportunity adds yet another avenue of growth to this already robust business," Cavanaugh said.

Along the same vein, high-speed Internet business revenue increased about 10 percent to $3.1 billion this year, and the carrier increased its number of Internet customers 1.5 percent to 320,000. Third-quarter 2015 has been the best quarter for Comcast's Internet segment in six years, according to the company.

Voice revenue declined 1.4 percent from third-quarter 2014 to $900 million, the result of the carrier expanding eligibility of its X1 entertainment operating system platform to Double Play customers, which slowed its addition of new customers to 17,000. Despite the decline, "Voice remains an important product for our customers and we believe it adds value to the bundle," Cavanaugh said.

Comcast reportedly recently notified Verizon of its plan to operate wireless phone and data service over Verizon's network, cashing in on a mobile virtual network operator (MVNO) agreement forged in 2011 that would allow Comcast to resell Verizon's cellular service in exchange for airwaves. The agreement was mentioned on the earnings call by Roberts, who said that while there was no "new news" regarding the MVNO, Comcast is in "test and learn mode."

"We believe that wireless is an important area. … It takes about six months to activate the MVNO. After we activate, we will update people as that progresses, but it is an opportunity to take the network and the investments that we made and try to see if we can continue relationship and product innovations," Roberts said.

PUBLISHED OCT. 27, 2015