Booming Business Services Revenue And Increased High-Speed Internet Adoption Boosts Comcast's Q2 Results

Cable giant Comcast posted strong second-quarter sales growth Wednesday bolstered by booming business services revenues that increased 17 percent year-over-year.

Comcast’s business services continued its upward trend during the fiscal 2016 second quarter, ended June 30. Revenue in that segment increased to $1.36 billion from $1.16 billion in the second quarter of 2015. Comcast attributed the robust growth in the business services unit to an increased number of small-business customers – a segment that accounts for 75 percent of business services revenue and 60 percent of its growth.

The Philadelphia-based provider also continued to see interest from midsize-business customers, a segment that is also experiencing revenue growth, said Michael Cavanagh, Comcast's senior executive vice president and CFO, on an earnings call Wednesday.

[Related: Comcast Names Leader For New Mobile Business Unit, Fueling Speculation About Wireless Play]

’Overall, business services have strong positive momentum and continues to represent a large and attractive growth opportunity for the company,’ Cavanagh said.

Comcast posted revenue of $19.27 billion for the second quarter, up 2.8 percent from $18.74 billion in the same quarter one year earlier. Net income for the quarter was $2.03 billion, down more than 5 percent from $2.14 billion one year earlier. While earnings per share for the quarter beat Wall Street expectations of 81 cents, earnings were down a penny to 83 cents from 84 cents one year before, a decline of a 1.2 percent.

High-speed internet customers, which include both residential customers and small businesses, increased by 220,000 – up 22 percent over last year’s net-added customers – marking Comcast's best second-quarter result in eight years. High-speed internet revenue increased 8.6 percent during the quarter to $3.4 billion compared with revenue of $3.1 billion in the year-ago period, reflecting strong customer growth and customers subscribing to higher levels of service, Cavanagh said. He added that high-speed internet continues to be the biggest contributor to overall cable revenue growth.

During the question-and-answer portion of the earnings call, Neil Smit, president and CEO of Comcast Cable Communications, took questions about Comcast's wireless strategy on the heels of the announced appointment of veteran Comcast sales and marketing executive Greg Butz to lead the brand-new Comcast Mobile business unit. Butz has a strong background in the wireless, communications and entertainment industries.

"We think that wireless represents a significant opportunity for the business," Smit said. "[Butz] has a great deal of experience in selling to our base and acquiring new customers. We are continuing to move forward with our strategy and [there will be] more to come in the future."

Adding a wireless and mobility practice would help put Comcast squarely in the enterprise conversation. Comcast should consider tapping its solution provider partners for help selling wireless services if the company's strategy comes to fruition, said a Comcast partner who requested anonymity.

"If Comcast did wireless in a really channel-friendly model, partners are going to be very interested," the partner said. "It would be a good thing for the industry to have more options."