Cable Challenged by Fewer People Moving, Chilling Subs Adds

Fewer Americans are moving, creating broadband woes for big cable, said three cable providers in their quarterly earnings reports. Charter Communications and Alitice cited fewer people moving as a big challenge for adding subscribers. Comcast also pointed last week to fewer people moving as an issue with its slowing broadband growth (see 2204280004).

The rate of Americans moving hit a 70-year low in 2021, with 27.1 million people reporting living at a different address than the year before, compared with 29.8 million in 2020, per the Census Bureau.

Charter ended Q1 with 28.3 million residential internet subscribers, up 900,000 year over year, it said Friday. That's about half the growth it had between Q1 2020 and Q1 2021 (see 2104300017). Chief Operating Officer Chris Winfrey said in a call with analysts the company had expected the broadband market to return to normal in 2021, but transaction volumes remain low, especially because of low mover churn, which is a big route to subscriber acquisition.

Altice ended Q1 with 4.4 million residential broadband subscribers -- flat year over year. CEO Dexter Goei, announcing the results, said the big jump in subscribers in 2020 and the early days of the COVID-19 pandemic has been reversing in recent quarters. Goei said subscribers also are more cautious about switching providers, fearing a disruption in service. Altice should start adding broadband subscribers in the back half of the year as it launches a multi-gig fiber broadband service in 2022, Goei said. He said it added 42,000 buildings to its fiber network in Q1 and is on track to do 175,000 this year. It will bring its fiber muti-gig network to more than two-thirds of its footprint over the next four years, reaching 6.5 million passings by end of 2025, he said.

"Does any legacy media company have a plan for the future of broadcast and cable networks?" tweeted LightShed analyst Rich Greenfield, noting a downward spiral of video subscribers among major providers. Altice ended Q1 with 2.7 million residential video subscribers, down 200,000 year over year. Charter lost 400,000, ending the quarter at 15.1 million.

Altice also lost 200,000 telephony customers year over year, ending the quarter at 2 million; it had 198,000 mobile lines at the quarter's end. Revenue was $2.4 billion, down $100 million. Charter ended the quarter with 8.5 million voice subscribers, down 600,000 year over year, and 3.8 million mobile lines, up 1.2 million. Its revenue for the quarter was $13.2 billion, up $700 million. Charter stock closed at $428.49, down 7.2%. Altice closed at $9.28, down 6.3%.

The slowing broadband growth isn't "because we are witnessing the last gasps of a once great business, but instead because Cable’s new growth engine -- wireless -- is rather neatly taking the baton from their older growth engine," MoffettNathanson's Craig Moffett wrote investors.

Fixed wireless access isn't a big competitor now, Charter and Altice said. Altice isn't facing big overbuilds by competitors, though AT&T's fiber network now passes about 600,000 homes in its footprint and Frontier is starting to "have some stickiness" in Connecticut due to its fiber extension there, Goei said. Pockets of small competitors are rolling out fiber in areas like Texas, Goei said. He said broadband subscriber numbers should start growing in the back half of the year.

Citing Charter's streaming platform joint venture with Comcast (see 2204270057), CEO Tom Rutledge said Charter is moving toward most of its video customer base getting video via IP, letting it recapture spectrum that then can be used for faster broadband speeds or capacity. He said Charter is in the midst of reallocating and expanding network capacity, using high splits. He said the company is ramping up its high-split projects. Most deployed modems already are high-split-capable so no swapping out is needed, he said.

Charter and Altice, like Comcast, said inflation isn't a major worry. Charter Chief Financial Officer Jessica Fischer said it's moving to a $20/hour starting wage for various jobs, but that hasn't had a significant impact. She said subscribers are facing inflationary pressures, but broadband subsidies should help alleviate some of that. Goei said 1% of Altice's cost base involves power. Goei said Altice would raise prices this year on higher-speed tiers.