Big Quarter for Comcast; Rumors around Charter

January 31, 2017 By Monta Monaco Hernon 

While not all cable operators have released their fourth-quarter financials yet, those we've seen so far - particularly Comcast's - look pretty promising.

Charter Communications (NASDAQ:CHTR) doesn't release its quarterly results until mid-February, but the news reports are rife with speculation that Verizon (NYSE:VZ) is orchestrating a takeover. While there's no guarantee that the rumors will materialize into anything, Charter's shares were up 5% by the end of Thursday, after the Wall Street Journal said that Verizon's CEO had approached Charter officials.

Comcast's (NASDAQ:CMCSA) quarterly and year-end report was strong with the addition of 161,000 video subscribers over the previous year - the best results in a decade - and 1.4 million high-speed Internet additions, which marked the 11thconsecutive year of more than 1 million net additions. The fourth quarter alone saw net video additions of 80,000 and high-speed Internet additions of 385,000.

Comcast also increased its dividend to 15% and announced a two-for-one stock split, payable as a dividend on Feb. 17.

Rogers Communications' (TSX:RCI.A) cable unit saw positive net subscriber additions for the second quarter in a row, driven by 30,000 Internet additions. Total Internet revenue grew 9% in the quarter, but would have been 12% if the CRTC (basically the Canadian equivalent of the FCC) had not reduced wholesale Internet rates.

Rogers offers gigabit Internet throughout its entire cable footprint and reported almost half of its residential customers have plans of 100 Mbps or faster.

"It's clear we have a competitive advantage with our Internet offering, and that's not only helping us win Internet customers, it's helping our cable business overall win back households as we return to increasing household penetration rates," said Tony Staffieri, Rogers' CFO.

Rogers announced a partnership with Comcast in December, through which it will deploy Comcast's X1 all IP-based video platform in early 2018. Staffieri said Rogers customers will benefit from Comcast's scale and substantial R&D investments, and Roger's video economics will benefit from the variable opex model in the Comcast agreement. This will limit cable video capex to success-based investment.

Specifically, Rogers will launch Comcast's digital home solution along with the IPTV platform in 2018. Digital home is a full home networking solution that will help customers control and manage connected devices. Rogers will also have access to Comcast's state-of-the-art customer premises equipment (CPE) and roadmap, including reduced cost set-top box configurations and advanced gateways. Rogers will begin deployment of new gateway, which can deliver 9 Gbps over WiFi in the home, in mid-2017.

Cogeco (TSX:CCA) President and CEO Louis Audet said he was pleased with the first quarter results of Canadian broadband company Cogeco Connexion and its American broadband subsidiary, Atlantic Broadband, and sees potential for further growth, particularly in Connecticut and Florida. Specifically, the American broadband services segment grew 7% during the quarter, and the Canadian broadband services segment grew 1%.

Shaw Communications (TSX:SJR.B) reported that net income for the current quarter decreased by $129 million relative to the first quarter of 2016 due to a non-recurring provision in the amount of $107 million related to the wind-down of the company's investment in shomi. There also was a decrease in income from sale of its media division, but this was offset by equity income of $27 million in the quarter from an investment in Corus.

Consumer revenue generating units declined by 29,696 in the quarter, which was an improvement over the 43,750 loss in first quarter of 2016. The 2017 first quarter was the first full quarter with WideOpen Internet 150.

"We are using our wireline broadband advantage to support WideOpen Internet 150 with the majority of new Internet customers opting for our two-year value plan, underlining the value we are providing with much faster speeds at affordable prices across 95% of our footprint," said CEO Brad Shaw.

Shaw is on track to complete a DOCSIS 3.1 upgrade by the end of fiscal year 2017. Shaw also has a partnership with Comcast, with an X1 TV experience, named BlueSky TV. Shaw says this has been launched in Calgary and will be expanded in major cities throughout the company's footprint throughout 2017.