Cable One highlighted positive broadband growth in the first quarter, reporting a sequential increase of more than 2,200 residential broadband subscribers. Despite more customers taking on higher speed tiers, the operator said the slow pace of home moves continues to impact new customer sales and net growth.
According to CEO Julie Laulis, sales of both 500 Mbps and 1-gig service plans rose “by more than 450 basis points sequentially,” driving a 4.5% year-over-year increase in ARPU growth.
“We also see substantial opportunity to continue upselling our current customer base, whose average service offerings remain below our sell-in levels,” she said on last week’s earnings call. In terms of data demand, Laulis noted nearly a quarter (21%) of residential subscribers use more than one terabyte of data per month.
As for pricing, she said Cable One is experimenting and “trying different things” with products and promotions, though sell-ins tend to “widely be on the upper end of our product value chain.”
Asked if Cable One is planning to take any pricing action this year, Laulis told analysts to “stay tuned” on that front.
“We haven't done a what I would call a ‘naked’ rate adjustment in about eight years now,” she said. “So while not predicting the future, I do believe that there is pricing elasticity even though we happen to have a high ARPU, again, driven by customer choice, customers being pulled up to higher levels of service versus us pushing them there.”
DOCSIS 4.0 plans
Cable One on its earnings call disclosed it expects network upgrades for DOCSIS 4.0 will cost around $200 per passing. That figure is on par with what Comcast plans to spend on its own upgrades. Charter, meanwhile, is aiming to roll out network enhancements at an even lower price of $100 per passing.
CFO Todd Koetje said the $200 price tag doesn’t include customer premises equipment, as not all subscribers will need to upgrade their legacy modems. However, customers looking “for all of those enhanced offerings and services that come with that 4.0 architecture” may require a CPE upgrade.
“We've been very actively already investing in that 4.0 architecture and specifically in the network architecture in terms of spacing of the amps and splitting of the nodes and deeper every time, we're doing that with our fiber, and that's what allows us to have that number be so efficient,” he added.
The operator on the call didn’t provide any specific updates on Clearwave Fiber, its joint venture with a handful of private equity firms. Formed last year, the JV ended 2022 with more than 100,000 passings across four states.
Cable One in the past year has also doubled down on its investments in fiber companies. In November, it invested $50 million to snag a minority stake in Ziply Fiber and last March acquired the assets of Kansas-based RG Fiber.
For Q1, Cable One said the fiber providers it has invested in added approximately 11,400 residential and business customers. That number doesn't include the operations of Metronet or Ziply, where Laulis said "we have less significant investments."
Financials
Consolidated revenue dropped 1.1% year on year to $421.9 million in Q1, which Cable One attributed to a decline in residential video and voice revenues which were partially offset by increases in residential data revenues. Net income totaled $57.4 million, compared to $171.5 million in the year-ago quarter.
Total residential internet customers amounted to 966,000. Cable One also ended the quarter with 2.72 million passings, up from 2.67 million in Q1 2022.