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US Cable, Satellite and Telco Trends for Q1 2014
 

US Cable, Satellite and Telco Trends for Q1 2014

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An overview of key figures for the consumer wireline businesses of the major cable, satellite and telecoms providers in the US, for Q1 2014. KPIs, financials and other metrics, including an analysis ...

An overview of key figures for the consumer wireline businesses of the major cable, satellite and telecoms providers in the US, for Q1 2014. KPIs, financials and other metrics, including an analysis of the impact of the Comcast-Time Warner Cable and AT&T-DirecTV mergers

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    US Cable, Satellite and Telco Trends for Q1 2014 US Cable, Satellite and Telco Trends for Q1 2014 Presentation Transcript

    • Jan Dawson Chief Analyst (408) 744-6244 jan@jackdawresearch.com @jandawson US Cable, Satellite and Telco trends for Q1 2014
    • Introduction • I’m making this slide deck available as a public service • I have yet to decide whether to do this quarterly for free or to make it part of my paid offering • Journalists and bloggers are welcome to embed the deck from Slideshare • They are also free to use individual slides / graphics with attribution and links - contact me for high res versions • Feedback welcome
    • Also available • I previously made a deck on the US wireless market in Q1 2014 available • For that deck, please see: • http://www.slideshare.net/JanDawson2/us-wireless- market-trends-q1-2014 • This deck follows a similar approach
    • Contents • Financials - revenues, profitability, ARPU • Subscribers - video, broadband and voice • Merger activity and its impact (Comcast-TWC, AT&T-DirecTV) • Conclusions
    • Coverage • This deck combines detailed analysis on a small number of large players with selected data on a larger number of players • Of the major cable, satellite and telco providers, only Cox is privately held, while the others all provide regular financial reporting • Cox and a large number of very small cable operators are the main companies missing from this analysis – as such, industry-level conclusions are limited • Throughout this deck, CST providers is used as an abbreviation for the set of players covered (cable, satellite & telco) • The focus of this deck is the consumer businesses of these companies
    • Financials used 6 Revenue Profits AT&T Consumer Markets Wireline business Cablevision Total “Cable Television” (i.e. consumer) “Cable Television” (i.e. consumer) segment CenturyLink Consumer revenues Whole company Charter Total revenues minus Commercial Whole company Comcast Cable Communications minus Business Services Cable Communications segment DirecTV DirecTV US DirecTV US DISH Subscriber-related revenue Total operating income Time Warner Cable Total residential Whole company Verizon Consumer Retail Wireline business
    • Revenues Source: Company reporting, Jackdaw Research analysis Consumer revenues at major CST providers, $m 0 2,500 5,000 7,500 10,000 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Comcast DirecTV AT&T TWC Verizon DISH Charter CenturyLink Cablevision
    • Revenue growth Source: Company reporting, Jackdaw Research analysis Year on year revenue growth -4% -2% 0% 2% 4% 6% 8% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Verizon Charter DISH DirecTV Cablevision AT&T Comcast CenturyLink TWC
    • Profitability Source: Company reporting, Jackdaw Research analysis Operating margins for major CST providers -20% -10% 0% 10% 20% 30% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Comcast DirecTV TWC Cablevision DISH CenturyLink Charter AT&T Verizon
    • ARPU Source: Company reporting, Jackdaw Research analysis Note: some calculations made where data is not made available. AT&T figure is for U-verse subscribers only Consumer ARPU for major CST providers 75 100 125 150 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Cablevision Comcast Verizon Charter TWC AT&T DirecTV DISH
    • Video subscriber growth Source: Company reporting, Jackdaw Research analysis Comcast Time Warner Cable Cablevision Charter Suddenlink Cable ONE Mediacom WideOpenWest AT&T Verizon CenturyLink Consolidated Communications DISH DirecTV Running Total Cable Satellite Telco -1,500 -1,000 -500 0 500 1,000 1,500 Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013
    • Video subscriber growth Source: Company reporting, Jackdaw Research analysis Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013 Comcast 24 -218 Time Warner Cable -34 -748 Cablevision -14 -89 Charter 44 134 Suddenlink 18 0 Cable ONE -14 -64 Mediacom -8 -62 WideOpenWest 0 3 AT&T 200 887 Verizon 57 424 CenturyLink 25 80 Consolidated Communications 0 3 DISH 40 5 DirecTV 12 160 Running Total 350 515 Cable 16 -1044 Satellite 52 165 Telco 282 1394
    • Broadband subscriber growth for major CST providers Comcast Time Warner Cable Cablevision Charter Suddenlink Cable ONE Mediacom WideOpenWest AT&T Verizon CenturyLink Consolidated Communications DISH Running total Cable Satellite Telco 0 500 1,000 1,500 2,000 2,500 3,000 Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013 Broadband subscriber growth Source: Company reporting, Jackdaw Research analysis
    • Broadband subscriber growth Source: Company reporting, Jackdaw Research analysis Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013 Comcast 406 1,269 Time Warner Cable 269 292 Cablevision 8 2 Charter 26 115 Suddenlink 35 69 Cable ONE 12 20 Mediacom 19 44 WideOpenWest 17 50 AT&T 110 121 Verizon 16 137 CenturyLink 66 140 Consolidated Communications 3 8 DISH 53 240 Running total 1,040 2,507 Cable 792 1,861 Satellite 53 240 Telco 195 406
    • Voice subscriber growth / shrinkage for major CST providers Comcast Time Warner Cable Cablevision Charter Suddenlink Cable ONE Mediacom WideOpenWest AT&T Verizon CenturyLink Consolidated Communications Running total Cable Telco -3000 -2000 -1000 0 1000 Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013 Voice subscriber growth Source: Company reporting, Jackdaw Research analysis
    • Voice subscriber growth Source: Company reporting, Jackdaw Research analysis Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013 Comcast 142 699 Time Warner Cable 107 -76 Cablevision 8 -7 Charter -4 -21 Suddenlink 12 48 Cable ONE -3 -11 Mediacom 4 25 WideOpenWest -5 -14 AT&T -476 -2,185 Verizon -181 -677 CenturyLink Consolidated Communications -3 -12 Running total -399 -2,231 Cable 261 643 Telco -660 -2,874
    • Total subscribers Source: Company reporting, Jackdaw Research analysis 0 10,000 20,000 30,000 Comcast DirecTV DISH TWC AT&T Verizon Charter Cablevision Suddenlink Video subscribers Broadband subscribers Voice subscribers
    • Total subscribers Source: Company reporting, Jackdaw Research analysis Total customer relationships as at March 31, 2014 0 10,000 20,000 30,000 Comcast DirecTV AT&T TWC DISH Verizon Charter Cablevision Suddenlink
    • 0% 20% 40% 60% 80% 100% 120% AT&T Verizon Penetration of primary service base with secondary services Source: Company reporting, Jackdaw Research analysis This is defined as penetration by existing services of the base of customers for the primary service - video for cable and satellite providers, and voice for telecoms providers. E.g. broadband subscribers as % of video subscribers, or video subscribers as % of voice subscribers. This is a measure of companies’ effectiveness in cross-selling and and penetrating their base. 0% 20% 40% 60% 80% 100% 120% Comcast TWC Charter Cablevision DISH Broadband Voice Video
    • Merger impact Source: Company reporting, Jackdaw Research analysis Subscriber numbers for Q1 2014 for major cable, satellite & telco providers 0 10,000 20,000 30,000 40,000 Comcast DirecTV DISH TWC AT&T Verizon Charter Cablevision Suddenlink C-TWC AT&T-DTV Video subscribers Broadband subscribers Voice subscribers Note: no adjustment made for planned divestment of Comcast subscribers to Charter, because these have not been detailed by service
    • Merger impact Source: Company reporting, Jackdaw Research analysis Total customer relationships including projected Comcast-TWC and AT&T- DirecTV mergers 0 10,000 20,000 30,000 40,000 50,000 Comcast DirecTV AT&T TWC DISH Verizon Charter C’vision S’link C-TWC ATT-DTV Note: no adjustment made for planned divestment of Comcast subscribers to Charter, because final subscriber numbers for each entity are not clear
    • Conclusions • The CST space continues to be dominated by a short list of about 10 providers with over 1 million subs • These are mostly growing and profitable • Comcast dominates already, with AT&T and DirecTV a considerable distance behind • There is something of a correlation between scale and profitability
    • Conclusions • ARPU ranges from just under $100 to around $150 per month • The ability to sell additional services (broadband and phone for cable, and broadband and video for telcos) is critical to raising ARPU • TV ARPUs remain around $100 per month for most providers
    • Conclusions • Almost all cable operators lost video subscribers year on year, likely largely to competing telco and satellite providers, approximately 1 million in total • Satellite providers gained a small number of subscribers • AT&T, Verizon and to a lesser extent CenturyLink gained a significant number of video subscribers • Among this group, there was net growth in video subscribers year on year - cord cutting is not in evidence
    • Conclusions • Broadband subscribers continue to grow at every company in our sample • All the cable and telecoms providers have now reached over 80% of their primary service base with broadband • Total broadband subscribers now sit at 81% of video subscribers in our sample
    • Conclusions • Voice subscribers continue to fall rapidly despite the gains made by cable operators • Though cable operators gained over 600k year on year, telcos lost almost 3 million, for a net loss of 2.2 million year on year • Broadband may well become the primary service at AT&T in the near future as BB growth continues
    • Conclusions • Were the Comcast-TWC (announced) and AT&T-DirecTV (rumored) mergers to go ahead, these players would instantly become by far the largest • DISH would be in a very distant third place, with less than half the video subs of AT&T-DirecTV • The mergers would create two powerhouses in a completely different league from all other players • Following divestments, C-TWC and AT&T-DTV would have a very similar number of total customer relationships at around 35m
    • Jan Dawson Chief Analyst (408) 744-6244 jan@jackdawresearch.com @jandawson Thank you