When Time Warner issued its Q3 06 earnings report yesterday, the operational data on Time Warner Cable were difficult to decipher. The nation’s number two cable operator just acquired a bunch of cable systems from Adelphia and has made other acquisitions and divestitures. Because of these changes, the numbers for Time Warner Cable weren’t sufficiently comparable for me to say much about how the operator performed during the quarter.
But, PaliCapital’s Richard Greenfield has gone through Time Warner cable’s SEC filings (including, I think, Time Warner Cable’s S-1, which is a prelude to a public stock spin-off) as well as yesterday’s earnings report to come up with a historical sense of what’s happening at the recently enlarged cable company.
One key take-away from Richard’s analysis is that sequential voice service growth has slowed at Time Warner Cable, a puzzling conclusion given that Time Warner’s peers, including Cablevision Systems, are still going gangbusters on their VoIP offerings, with Cablevision reporting 22% VoIP penetration at the end of Q2 06. Pro forma (both historical and recently acquired Time Warner systems) VoIP penetration is at 10%. And net adds for Q3 06 were only 187,000, down from the 214,000 during Q2 06 and the 250,000 in Q1 06.
During the earnings call, Time Warner President Jeff Bewkes was asked about what appeared to be a slow-down in voice growth.
So you definitely ask yourself, have we hit a ceiling? No, it is very clear to us that we have not. We have several systems already over 20% — Albany, Syracuse, Binghamton — all heading towards 25%. And with offerings like the $99 triple-play bundle, which we introduced in every division in September, we don’t see why we cannot get there and keep moving up across our footprint. And, as Dick [CEO Dick Parsons] said, we have not yet put it into our Adelphia and Comcast systems or mostly our Adelphia systems. We have really high hopes for pretty rapid progress there as we integrate those.
Bewkes also said that getting the first 10% of customers is far easier than getting the second 10% of customers.
Cynthia Brumfield at 8:54 AM|Comments(0)
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