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An Earnings Season Tale of Two ISPs

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[qi:109] Comcast, the largest cable provider in the U.S. reported earnings today as did Qwest, the No. 3 telco provider. Comcast watched its earnings rise by 33 percent.  Qwest (s Q) saw sales drop and announced it will layoff 1,200 people. Between these two earnings releases, there are large differences that show how bundles help boost communications services and how landline voice access is waning.

Comcast (s CMCSA) saw its sales rise 10 percent to $8.55 billion for the third quarter of the year, which led to adjusted earnings of $691 million. It also had an average revenue per user (ARPU) of $110.71, up 9 percent from the same quarter last year, driven by bundling and the fact that video service is generally more expensive than voice and broadband. Comcast has more video subscribers than voice and data combined, but 22 percent of its customers take a voice, data and video bundle. Its broadband subscribers grew by 11 percent and its voice subscribers by 9 percent. But voice is slowing, and Comcast only added 483,000 subscribers, who are paying a lower monthly rate than during previous quarters.

Qwest, on the other hand, reported revenue of $3.4 billion, down 2 percent from the third quarter the year prior, and earnings of $151 million, compared with $2.1 billion the year prior. However, in 2007 it reported a loss before taxes of $84 million, but saw a $2.15 billion benefit that pushed its earnings so high. Consumer ARPU grew 6 percent to $56, up from $53 for the same period last year, but that figure obviously lags behind the cable giant. Qwest saw its video subscribers increase by 25 percent, but from a small base number. Broadband growth was 11 percent to 2.8 million customers and landlines dropped 10 percent to 8 million from 8.9 million. What we are seeing between these two communications companies is the power of bundles and the slow decline of landlines.

8 Responses to “An Earnings Season Tale of Two ISPs”

  1. Oops, just rechecked: Qwest has finally wired our neighborhood for internet service that’s faster than 1.5Mbps. Meantime, I didn’t realize that Qwest’s wireless was as a MVNO. My mistake. Nevertheless, Qwest has the reputation of having broadband that’s behind cable in terms of speed; they’ll have to do better marketing to fix that reputation. Competition from cable may force them to do that.

  2. Comcast doesn’t offer mobile! Qwest does offer mobile in our area, but they are a distant player behind AT&T, Verizon, Sprint and T-Mobile.

    I think part of the problem is speed. In our area, Comcast was 4x faster than Qwest. Qwest doesn’t offer DSL faster than 1.5Mbps in our area. OTOH, Comcast competes with FIOS in the next town over, so Comcast really acts like they want our business. Going with Comcast for data was a no-brainer.