IP Democracy: TW Cable is Doing Swell, "Local-Only" Voice Planned
Despite absorbing some neglected and outmoded Adelphia cable systems and on the heels of its stock spin-off from parent company Time Warner, Time Warner Cable continued to post healthy gains in overall and new service subscribers during Q1 07 according to the company’s earnings report (PDF here) released this morning.
On a pro forma basis (assuming the spate of recent acquisitions and system swaps are reflected in all time periods), revenues rose 10% year-over-year to $3.7 billion for the nation’s number two cable company while cash flow advanced 12% to $1.3 billion.
Even with underperforming Adelphia systems dragging down growth, Time Warner Cable boosted its basic subscriber count by 46,000 to reach 13.5 million by quarter’s end. High-speed data growth accelerated to 356,000 net new customers during the quarter, up from the 241,000 net adds during Q1 06 and 245,000 during Q4 07. At the end of the quarter Time Warner Cable served seven million cable modem subscribers, representing 27% of homes passed.
Digital video subscriptions jumped by a net 278,000 subscribers during the quarter, up from the 241,000 net adds during Q1 06, leaving Time Warner Cable with 7.6 million digital video customers, reflecting 56% of basic subscribers, at quarter’s end.
Digital telephony growth seemed to drop off a little, although with the complex changes in system composition, it’s hard to tell. Time Warner Cable added 234,000 net new digital voice, or VoIP customers, during Q1 07, down slightly from the 270,000 net adds for Q1 06 — but the company stressed that VoIP growth accelerated in the “legacy” systems, those that were owned by Time Warner in both Q1 06 and Q1 07. Legacy systems added 210,000 net new voice customers during Q1 07, up from 208,000 net new voice customers added in Q1 06.
By quarter’s end, Time Warner’s digital telephony customer count was 2.094 million or about 12% of homes passed. During the earnings call, company executives revealed that Time Warner Cable will roll out a “local-only” digital voice option this year which, presumably, will be cheaper than the company’s current options and could likely spur renewed or bigger growth in Time Warner Cable’s voice service.
Time Warner Cable currently offers unlimited local and long distance digital voice service for $39.95/month for triple-play customers and, in some markets, offers unlimited local and regional long distance digital voice service for $29.95/month. The local-only voice service will likely be priced substantially below these levels ($15 to $20 per month?).
| AOL Selected Statistics ($ in mil, except per sub.) | |||||
| 1Q06 | 2Q06 | 3Q06 | 4Q06 | 1Q07 | |
| Total U.S. AOL Subs. | 18,640 | 17,664 | 15,198 | 13,183 | 11,999 |
| Net Change | (835) | (976) | (2,466) | (2,015) | (1,184) |
| % Change | -4% | -5% | -14% | -13% | -9% |
| Total AOL Ad Revenue* | $ 392 | $ 449 | $ 479 | $ 566 | $ 549 |
| Net Change | $ 13 | $ 57 | $ 30 | $ 87 | $ (17) |
| % Change | 3% | 15% | 7% | 18% | -3% |
| Total AOL Revenue | $ 1,981 | $ 2,046 | $ 1,983 | $ 1,856 | $ 1,458 |
| Net Change | (31) | 65 | (63) | (127) | (398) |
| % Change | -2% | 3% | -3% | -6% | -21% |
| Domestic Ad Revenue (Less TAC) | $ 275 | $ 295 | $ 304 | $ 361 | $ 345 |
| Net Change | $ 16 | $ 20 | $ 9 | $ 57 | $ (16) |
| Avg. Mo. Unique Visitors (mil.) | 107 | 113 | 112 | 111 | 111 |
| Net Change | (2) | 6 | (1) | (1) | - |
| Ad Revenue Less TAC Per Unit | $ 2.56 | $ 2.62 | $ 2.71 | $ 3.25 | $ 3.11 |
| Net Change | $ 0.18 | $ 0.06 | $ 0.09 | $ 0.54 | $ (0.14) |
| Total Page Views (mil.) | 52,634 | 51,665 | 48,692 | 44,383 | 43,959 |
| Net Change | (893) | (969) | (2,973) | (4,309) | (424) |
| Monthly Page Views/Unique Visitor | 163 | 153 | 145 | 133 | 132 |
| Net Change | (1) | (10) | (8) | (12) | (1) |
| Domestic Ad Revenue Less TAC Per 1,000 Page Views | $ 5.23 | $ 5.71 | $ 6.24 | $ 8.13 | $ 7.85 |
| Net Change | $ 0.40 | $ 0.48 | $ 0.53 | $ 1.89 | $ (0.28) |
| OIBIDA | $ 444 | $ 505 | $ 563 | $ 302 | $ 542 |
| Operating Income** | $ 265 | $ 329 | $ 390 | $ 910 | $ 1,084 |
| *Includes a one-time $19 million benefit from an accounting change for Q1 07 | |||||
| **Includes a one-time $670 million gain from the sale of AOL Germany and lower depreciation ($22 million) and amortization ($11 million) costs. | |||||
| Source: Emerging Media Dynamics, Inc. analysis of company data. © 2007. | |||||
Posted by Cynthia Brumfield on May 2, 2007 10:49 AM to IP Democracy