Cable had a rough quarter in Q2 2022 in terms of subscriber net additions, with Comcast, Charter Communications and Altice USA collectively losing more than 60,000 customers. Though Q2 is a seasonally weak quarter, analysts at New Street Research tipped cable’s struggles to continue into Q3 as well.
During Q2 earnings, cable operators gave a variety of reasons for their subscriber woes ranging from lower move activity to modest impacts from fixed wireless access. However, executives insisted their cable products continued to perform well against the competition for so-called jump balls.
But New Street analysts argued cable’s share of gross additions (SOGA) has fallen substantially since reaching a peak during the pandemic as fiber and fixed wireless have gained ground. Specifically, cable’s figure has plunged from 74% of gross adds in Q2 2020 to 61% in Q2 2022.
“With SOGA well below market share of 69%, cable is losing share,” they wrote. “FWB and Fiber added close to 1.2MM subscribers between them [in Q2 2022], while Cable and DSL lost 0.6MM. Cable has been losing market share at an accelerating pace since 4Q21. DSL market share losses have been steady.”
The firm predicted this trend would hold in Q3 and ultimately estimated cable would lose around 55,000 subscribers in the quarter. Fiber and fixed wireless were forecast to add an estimated 1.37 million customers in Q3. New Street tipped cable’s losses to improve substantially to 4,000 customers in Q4, but not disappear entirely.
Cable executives themselves indicated Q3 has gotten off to a rocky start. During Q2 earnings at the end of July, Comcast’s CFO said it had lost 30,000 customers thus far in Q3, though noted the operator was hoping to see an improvement in August and September during the back-to-school season. Similarly, while he didn’t give precise numbers, Altice USA’s CEO Dexter Goei noted during Q2 earnings “July is seasonally typically the worst or second-worst month of the year” while August and September are some of the strongest. Charter executives echoed these comments.
In order to get back to positive net additions, New Street said cable needs to boost its share of gross additions or improve churn relative to competitors. But the analysts warned “We don’t see SOGA improving without a material change in product or price relative to the industry. Cable is playing catch-up to Fiber on product; we hope they don’t cut price. We don’t see a clear case for improved churn relative to the industry either.”