High-Speed Internet, Business Services Key To Comcast's Q3 Cable Services Revenue Success

On its third-quarter 2017 earnings call Thursday, Comcast executives touted the company's burgeoning wireless service and Gigabit-speed internet offerings as key to boosting business services revenue.

Comcast's DOCSIS 3.1-based internet service is letting customers reach Gigabit speeds, and the Philadelphia-based provider expects to have the service available in the majority of its markets by year-end, Michael Cavanagh, Comcast's senior executive vice president and CFO, told investors on the earnings call.

Comcast's business services revenue increased 12.6 percent from $1.40 billion in the third quarter last year to $1.58 billion for the 2017 third quarter, which ended on Sept. 30.

[Related: Comcast's New SD-WAN Service Signals A Hot Pursuit Of Enterprise Customers]

Growth in business services, an area that continues to be a "top driver" for the provider's repeatedly strong cable results, according to Cavanagh, is in part coming from growing demand around high-speed internet.

Overall, Comcast's success in the business services space is driven by its connectivity portfolio, he said.

"We have even more runway to increase share in our data products as we move to Gigabit speeds throughout our footprint, and as we continue to push fiber deeper into our network," Cavanagh said.

At the same time, an increase in the number of customers buying Comcast's small- and midsize-business services are also giving business services a boost, according to the provider.

"We continue to augment growth through applications and services that ride on top of our core connectivity business, including voice and video surveillance products," Cavanagh said. "Additionally, our recently launched SD-WAN product will [give us] new opportunities to serve branch offices and multi-site businesses."

Chairman and CEO Brian Roberts said Comcast added 115,000 new customer relationships during the quarter. Of those, 31,000 were new business customer adds. The company predicted that it would have added about 150,000 customers overall if not for the hurricanes that hit the U.S. in October.

Comcast's new wireless service, Xfinity Mobile, which has been available since May, has more than 250,000 subscribers and the provider is poised to scale the product from there, Roberts said at the top of the call.

Comcast introduced Xfinity Mobile in 2016 and began rolling it out to customers in the middle of its last quarter. Right now, the service is only available to Comcast's broadband internet subscribers as a bundled internet and wireless offering. Comcast did not disclose specific revenue numbers around the wireless service.

"Introducing new products as a part of a multi-product bundle deepens our relationships [with customers], thus improving retention," Cavanagh said.

Cable Communications revenue climbed 5.1 percent to $13.20 billion during the quarter, up from $12.56 billion in third-quarter 2016. As Comcast noted during its second quarter, growth in cable is attributed to increases in high-speed internet -- its most popular cable offering -- video, and high-margin business services revenue.

Comcast reported an 18.5 percent increase in net income to $2.65 billion in the third quarter, up from $2.24 billion in third-quarter 2016. The cable giant posted adjusted earnings of 52 cents per share for the quarter, up 13 percent over third-quarter 2016's 46 cents per share. Revenue, however, dipped 1.6 percent to $20.98 billion, down from $21.32 billion in the year-ago quarter.

Comcast beat Wall Street's earnings estimates of 50 cents a share, but missed slightly on expected revenue of $21.04 billion in revenue, according to analysts surveyed by Thomson Reuters.