Comcast's Business, Connectivity Services Continue 'Exceptional' Track Record As Cable Giant Looks To High-Speed Internet Opportunities In 2018
Comcast closed out 2017 with double-digit growth in business services revenue, and the cable giant is placing its bets on its high-speed connectivity offerings in 2018 to continue to drive strong financial results.
Connectivity services alone generated more than $20 billion in revenue and grew by about 10 percent during 2017, according to Comcast.
Comcast Chairman and CEO Brian Roberts took to the cable giant's fourth-quarter 2017 earnings call Wednesday to highlight the company's strength in its cable division, which includes its connectivity services. Revenue-wise, the cable division is led by its "exceptional" business services unit, Roberts said.
Comcast's business services revenue increased 12.2 percent from $1.44 billion in the fourth quarter last year to $1.62 billion for fourth-quarter 2017, which ended Dec. 31.
Growth in Comcast's cable communications business unit has been driven by strong business services for the past several years, and the last quarter of 2017 was no exception, Michael Cavanagh, Comcast's senior executive vice president and CFO, told investors on the earnings call.
While Comcast business services have primarily served small-business customers, the cable giant has been making a push upstream over the past year to target more midmarket and enterprise customers.
"What's particularly exciting is the room for growth ahead as we have the opportunity to take more share in each of our customer segments," Roberts said. "We're still in the early stages of bringing our products to larger, addressable markets."
Overall, cable communications revenue climbed 3.4 percent to $13.28 billion during the quarter, up from $11.97 billion in fourth-quarter 2016. Comcast attributed the growth to the company's connectivity offerings, specifically high-speed internet, the most popular cable product.
Comcast added 350,000 new high-speed internet customers during the final quarter of 2017, according to Roberts. The company also added 33,000 new business customers.
At the same time, the Philadelphia-based company lost 13,000 voice customers in fourth-quarter 2017.
Cable revenue, which grew 4.9 percent overall during 2017, is being helped by customers getting more value out of its subscriptions, Cavanagh said. Comcast last year introduced its DOCSIS 3.1-based internet service, which lets customers reach Gigabit speeds, and the product has been rolled out in about 80 percent of Comcast's footprint so far, according to Dave Watson, president and CEO of Comcast Cable.
The provider expects to have the DOCSIS 3.1-based internet service available across all of its markets by year-end, Watson said.
"As consumption and usage continues to climb, we're going to be ahead of the curve in terms of capacity," Watson said.
Comcast also highlighted its Xfinity Mobile service that it introduced in 2016 and began rolling out to customers last year. The wireless service, which is available to Comcast's broadband internet subscribers as part of a bundled offering with internet services, is another product that adding value, Cavanagh said.
Comcast still hasn't disclosed specific revenue numbers around the wireless service, but said that it brought on 380,000 subscribers in 2017.
Net income increased to $14.99 billion during the fourth quarter, up from $2.30 billion in the last quarter of 2016, which the company attributed primarily to a reduction of net deferred income tax liabilities as a result of the 2017 tax reform legislation that was passed at the end of 2017, Cavanagh said.
Thanks to the recently passed Tax Cuts And Jobs Act, Comcast also revealed plans to investors that it would increase its dividend by 21 percent and repurchase at least $5 billion in stock in 2018.
The cable giant posted adjusted earnings of 49 cents per share for the quarter, up 8.9 percent over third-quarter 2016's 45 cents per share. Revenue grew to $21.92 billion in fourth-quarter 2017, up 4.2 percent from $21.03 billion in the year-ago quarter.
Comcast beat Wall Street's earnings estimates of 47 cents a share on expected revenue of $21.82 billion, according to analysts surveyed by Thomson Reuters.
Overall, 2017 revenue increased 5.1 percent to $84.53 billion, up from $80.40 billion in 2016. Adjusted earnings per share for the year jumped from $1.74 in 2016 to $2.06 per share in 2017.