Shares of Comcast (CMCSA) fell as much as 7.5% on Monday after Dave Watson, president and CEO of Comcast Cable, said the company expects the number of broadband subscribers to decline by more than 100,000 in the current quarter.
Wall Street had expected the number of broadband subscribers to decline by about 63,300, according to Bloomberg’s latest consensus estimates.
The afternoon stock move represented the biggest intraday drop since April 25.
“If you look at the first half of the year, we lost about 100,000 [broadband subscribers] – just under 100,000 per quarter in the first half of the year,” Watson said Monday at a UBS media conference in New York City.
“You enter the third quarter on the shoulders of the Olympic marketing wave, the return of the students, the seasonal dynamics are good, and then a strike of the competition. These three things drove improvements in performance in the third quarter [but the fourth quarter] looks more like the first half of the year.”
In the third quarter, Comcast lost 87,000 Internet customers as Watson described the current broadband market as “competitively intense.”
Wireless carriers such as Verizon (VZ), T-Mobile (TMUS) and AT&T (T) have entered the space with more flexible offerings to attract lower-income consumers. All three of these companies saw subscriber growth in the third quarter.
Along with increased competition, the two hurricanes in the Southeast earlier this fall likely escalated broadband losses by about 10,000 and contributed to a “small impact” on average revenue per user (ARPU), Watson said.
He expects ARPU for the current quarter to remain “at the lower end” of a range between 3% and 4%.
“So if you put all these things together and look at the fourth quarter, we could be looking at a fourth quarter broadband subscriber loss of just over 100,000,” he said. “This keeps things competitively intense, but consistent with earlier parts of the year.”
Comcast’s broadband woes come as the company also reported a decline of 365,000 TV consumers as more consumers cut the cord in favor of cheaper streaming services.
The company said last month it would divest its cable business, with the exception of Bravo, after teasing the possibility just a few weeks earlier. At the time, the company said it wanted to “play offense” to combat an industry burdened by increasing cord-cutting.
The spun-off company, tentatively called SpinCo, will house most of NBCUniversal’s cable television networks, including USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and Golf Channel.
