Comcast's Smit says large business segment represents a $13B-$15B opportunity

Comcast Center headquarters in Philadelphia. Image: Comcast

Comcast may still be an insurgent player in the large-sized enterprise business services space, but the service provider is confident that it can take further share.

Neil Smit, president and CEO of Comcast Cable, told investors during a fourth-quarter earnings call that it sees the large enterprise segment as one that has large revenue implications.

“The opportunity in enterprise is we believe it is a $13 to $15 billion opportunity in our market,” Smit said. “We see strong growth across small, medium and large-businesses.”

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Business services overall were $1.44 billion, up from $1.26 billion in the same period a year ago.

The cable MSO reported that business services revenue rose 14.5% due to an increase in small business customers and medium-sized customers.

“This growth was primarily driven by the net increase in customers,” said Michael Cavanagh, Senior EVP and CFO for Comcast, during its earnings call.   

Small, medium businesses remain strong

Comcast currently has about 20% market share in the small business market and 15% share in the medium-sized business segment.

Small business accounts for over 70% of Comcast’s revenue and over 60% of its growth.

At the same time, Comcast Business’ aggressive build out of Ethernet and fiber is fueling medium-sized business growth.

Over the past quarter, Comcast Business won a service deal with a large financial company that has about 2,000 locations, a large health care provider with 1,000 locations, and a retail provider with 2,000 locations.

Comcast currently holds a sixth-place ranking on Vertical Systems Group’s U.S. Leaderboard.

“Revenue for the mid-sized business segment had a higher growth rate fueled primarily by additional Ethernet sites as we continue to invest in expanding that business,” Cavanagh said.

Multi-city fiber expansions

As it continues to expand its presence in medium and large business accounts, Comcast has been aggressively building out fiber into more major cities.

In December, Comcast Business won a multiyear agreement with its hometown of Philadelphia to build an Institutional Network (iNet) aimed at enhancing local business access to higher broadband speeds while reducing costs.

Upon completing the network build in Philadelphia, the city’s capacity to the internet to get access to the city’s cloud applications will increase by a factor of 20 times over the current network.

Outside of Philadelphia, Comcast began a multimillion-dollar expansion of its fiber-based network across Montgomery County, Maryland, in October. 

Upon completing this build, Comcast will be able to make up to 100 Gbps of network capacity available to 5,800 local businesses, government agencies and hospitals.

Building out fiber into these major cities will enable Comcast Business to more effectively compete with incumbent telcos like AT&T and Verizon, which have long enjoyed a comfortable customer base with large businesses.

From an overall financial perspective, Comcast reported that consolidated fourth-quarter 2016 revenues rose 9.2% to $21 billion. Consolidated operating income increased 6.6% to $4.3 billion.