IP Democracy: Comcast Shines on VoIP Growth

Philadelphia-based cable operator Comcast is riding high — the company is about to absorb a whole bunch of underperforming systems from Adelphia and its Q2 06 earnings results, released this morning, attest to the company’s ongoing financial strength. Overall (including cable systems and programming networks) revenue grew 11% year-over-year to $6.2 billion, while overall cash flow advanced 12% to $2.4 billion. Operating income jumped 17% to $1.2 billion, while earnings per share advanced 16% to $.22.

The cable division alone, the heart of the company, showed even more impressive results. While cable revenue also grew by 11% year-over-year to $5.9 billion, operating cash flow jumped by 14% to $2.5 billion.

Although Comcast reverted to basic subscriber losses for the quarter, which the company attributed to seasonal declines, other subscriber levels showed healthy year-over-year gains, particularly Comcast Digital Voice (CDV), the cable company’s VoIP option. Comcast added 306,000 net new CDV voice customers during the quarter, up from 211,000 added during Q1 06 and only 15,000 added during Q2 05, reflect the ramped-up rollouts of VoIP that Comcast began in late-2004.

During Comcast’s earnings call, President Steve Burke said that new CDV subscriptions continue to accelerate. In Q4 05, the company was adding 10,000 net new voice customers per week, a figure that more than doubled to Q2 06. “Once we set our sites on something, we tend to do it very well,” Burke Said.

Comcast added 305,000 net new high-speed customers during the quarter, up slightly year-over-year, ending Q2 06 with 9.3 million modem subscribers, reflecting 22% of homes passed. Digital cable subscriptions grew by a healthy 350,000 during the quarter, a run-rate 23% higher year-over-year. However, a good portion, if not most, of this digital growth reflects Comcast’s push to get digital boxes in every subscriber’s home via its “digital basic” initiative. Many of those digital customers aren’t purchasing the higher-priced tiers of service, although they are able to buy VOD services.

Revenue and subscription growth was strong enough during the first half of the year for Comcast to up its full-year financial guidance. The company now expects revenue growth of 10% to 11% for the year, up from the 9% to 10% previously projected. Operating cash flow is expected to reach at least 13% growth, up significantly from the previous 10% to 11% range. Revenue generating units, i.e. all individual subscriptions combined, are expected to grow at least 20% higher than the earlier guidance of 3.5 million additions for the year.

Posted by Cynthia Brumfield on July 27, 2006 11:54 AM to IP Democracy