Jason Armstrong, CFO of Comcast Corporation, spoke at the Morgan Stanley Technology, Media & Telecom Conference, outlining Comcast’s key growth drivers.
“2023 was a really good year for Comcast,” said Armstong. “We grew both earnings per share and free cash flow per share.”
Armstong relayed that Comcast has six business lines that it considers major growth drivers, and with 32 million subscribers, broadband is chief among them.
“We are really aligned as a company around six major growth drivers we have, six businesses that, in the totality of our $120 billion in revenue, generated $70 billion,” said Armstong. “Last year, they grew high single digits; the year before that was sort of in the same range. So, we’ve got six businesses that are diversified but related, that are growing, and that are at scale. And priority number one is to just invest in those businesses to continue to drive growth.”
Second behind broadband is wireless. The company now has 6.6 million lines and has penetrated 11% of its broadband base.
“There’s a really good trajectory in wireless,” said Armstong, “and we’re going to continue to invest there.”
Broadband growth ahead
Comcast lost 32,000 broadband subscribers in Q4, but Armstong believes the overall broadband market is healthy and that the company will soon see growth.
“I think it’s always helpful to step back and go real macro on broadband and then get into the micro,” said Armstong. “From a macro perspective, I would say the market is very healthy. If you look at 2022 and 2023, I think the overall market added somewhere in the range of 3.5 to 4 million broadband customers in each of those years. That tells you the overall market is growing. When you get down to the customer level, asking what the average customer is doing, there’s good news: the average customer is doing more on their network. They’re consuming more year after year, they’re hanging more devices off their network, and the utility of broadband is as strong as it’s ever been. So, I think that’s a very healthy framework overall.”
Armstong also noted a focus on individual customers and using their habits now to predict future trends.
“We’re seeing that our average customer is using 700 GBs per month, but our ‘superusers’—which is where the world is going in sort of a five-year timeframe—usually the median user equals the superusers five years forward. That has certainly been the case in the last five years, and our superusers are up to around 2 TBs per month. So, if that’s the way the world is going, that’s terrific.”
Despite the healthy market, Armstong recognizes the competitive nature of broadband.
“On the competitive environment, I would echo what I’ve heard at this conference: it’s a competitive market, no different than what we said on the fourth quarter call, which is ‘the markets as competitive as it’s been in quite a while… but I think we’re competing very well.”
Meeting customer needs
Armstong doesn’t see the competitive environment putting Comcast’s consistent ARPU rate at risk and says the company is focused heavily on growing its customer base.
“It’s a competitive environment,” he said, “so I’m not sure I’d predict [customer growth] in the coming quarters, but when you look beyond that, the foundational works to sort of create that opportunity down the line are all in place. It’s about upgrading the existing network, which we’re doing at a pretty rapid pace between mid-splits and DOCSIS 4.0, which we have both of those going sort of at pace right now—that facilitates a path to multi-gig symmetrical in the home, which if you combine that you tackle sort of what a customer wants from us: they want high speeds, they want high reliability, and they want low latency.”
Armstong also believes that Comcast is well-positioned to meet rising aggregation demands.
“Aggregation is a big pain point for customers right now,” he said. “They love their content, but they can’t find it sometimes. We’ve got, I think, a best-in-class aggregation product…the cable industry broadly is voting—we’ve got the best aggregation products. I bring that up because the totality of what you bring to the customer is sort of foundational to ‘can you move the needle once you get past this era of pretty aggressive competitor activity,’ particularly at the low end.”
Comcast is also focused on increasing passings.
“The other thing we’re doing is following the money in this industry,” said Armstong. “We’re accelerating our homes passed. So, we were at 850,000 incremental homes passed in 2022. We did 1.1 million in 2023, so up pretty significantly, and we did it at a pretty reasonable capital intensity, and we gave an outlook this year that says we’ll do 1.1 million or higher homes passed.”
Comcast’s long-term strategy also involves a focus on competing against fiber.
“We’ve always viewed fiber as a very viable competitor,” said Armstrong. “That is our competitor for the long term. We’ve gone from zero percent of our base to almost fifty percent of our base being exposed to a fiber competitor, and that’s not stopping, but we know how to compete with fiber very well.”
As for winning on a multi-year time frame, Armstong says it comes down to whoever has the lowest cost to serve and lowest marginal cost to serve.
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