Comcast (CMCSA) shares fell as much as 7.5% Monday after Dave Watson, president and CEO of Comcast Cable, said the company expects broadband subscribers to decline by over 100,000 in the current quarter.
Wall Street had expected broadband subscribers to fall by about 63,300, according to the latest consensus estimates compiled by Bloomberg.
The midday stock move represented the largest intraday decline since April 25.
“If you look at the first half of the year, we lost just about 100,000 [broadband subscribers] — just under 100,000 per quarter for the first half of the year,” Watson said Monday at a UBS media conference in New York City.
“You go into the third quarter and on the shoulders of the Olympic marketing surge, the students returning, the seasonal dynamics trending fine, and then a competitor strike. Those three things saw improvements in performance in Q3 [but the fourth quarter] resembles more of the first half of the year.”
In the third quarter, Comcast shed 87,000 internet customers, as Watson described the current broadband marketplace as “competitively intense.”
Mobile providers like Verizon (VZ), T-Mobile (TMUS), and AT&T (T) have entered the space with more flexible offerings to attract lower-income consumers. All three of those companies saw subscriber gains in the third quarter.
Along with increased competition, the two Southeast hurricanes earlier this fall likely escalated broadband losses by about 10,000 and contributed to “a slight impact” on average revenue per user (ARPU), Watson said.
He expects ARPU to remain “at the lower end” of a range between 3% and 4% for the current quarter.
“So when you add all these things together and you look at it going into Q4, we could be looking at a broadband subscriber loss in Q4 of just over 100,000,” he said. “That’s how things remain competitively intense, but consistent with earlier parts of the year.”
Comcast’s broadband struggles come as the company also reported a decline of 365,000 TV consumers as more consumers cut the cable cord in favor of less expensive streaming services.
The company said last month it would spin off its cable properties, with the exception of Bravo, after teasing the possibility just a few weeks prior. At the time, the company said it wanted to “play offense” in order to combat an industry burdened by increased cord-cutting.
The spun-off company, dubbed SpinCo for now, will house most of NBCUniversal’s cable television networks, including USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and the Golf Channel.
