Cable One unveiled a plan to ditch its 100 Mbps plan at the end of Q1 and make a 200 Mbps tier its entry-level offering, citing strong demand for higher speed services.
On an earnings call, CEO Julie Laulis said approximately 22% of its residential broadband customers are currently on its 100 Mbps plan, but “200 meg will become – and quite honestly it already is – our standard offering.”
She said the move comes in response to consumer demand for faster speeds, noting four out of five new customers in Q4 opted for speeds at or above 200 Mbps. She added sell-in for its 1-gig product has more than doubled since 2020 to over 14%.
At the close of the current quarter, customers on the 100 Mbps tier will be automatically bumped up to its 200 Mbps plan at a monthly cost increase of around $5. Pricing for the 200 Mbps plan will remain at $65, but Cable One is planning to add a new 300 Mbps option to its lineup at a cost of $80 per month. Its 500 Mbps plan will run $90 per month.
In the process of making these changes, Laulis said it’s actually lowering the price of its gig and unlimited tiers but “we’ve done the modeling and know that it will still result in ARPU growth.”
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Cable One serves more than 1.1 million residential and business customers across 24 states with its family of brands. Laulis said less than 28% of its footprint overlaps with a competitor providing a service of 100 Mbps or higher, while less than 5% of its area overlaps with two companies offering the same.
Steven Cochran, Cable One’s CFO, added it currently competes with fiber in about 17% of its footprint. While it expects that figure to rise over time, he argued that “at 38%, 39% penetration in a market where there’s two operators, we still have the opportunity to maintain our fair share and still grow from here.”
The operator recently closed a previously announced joint venture transaction to create Clearwave Fiber as well as a deal to acquire assets from Cable America Missouri. Cochran said “we fortunately have a nice pipeline of deals that are tied to the different investments that we’ve made and continue to see opportunities where someone’s looking for a minority investor.”
“In those deals where it’s just truly selling out, we’re not all that competitive,” he continued. “In transactions where they’re looking for something unique, that’s where we’ve had the ability to transact. We still see that opportunity existing.”
Metrics
Consolidated revenue jumped 28.5% year on year to $432.6 million, with residential data revenue up 27.6% to $224.5 million. However, net income plummeted 39% to $64.8 million. Full year revenue of $1.6 billion was up from $1.3 billion, but full year net income fell 4.1% to $291.8 million.
The operator ended 2021 with 957,000 residential data primary service units (PSUs), compared to 777,000 at the end of 2020. Business data PSUs increased from 80,000 to 97,000 over the same period.