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What Drives Cable Companies’ Customer Net Additions?

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Mar. 2 2016, Updated 11:07 a.m. ET

High-speed Internet customers

Comcast (CMCSA) had 27.7 million subscribers for its triple-play (high-speed Internet, voice, and video) services in 4Q15. The company had net customer additions of 281,000 in 4Q15, an improvement of 57.6% over net customer additions of 178,000 in 4Q14.

It is interesting to note that for companies like Comcast, these net customer additions were driven by an increasing number of customers opting for two or three products among the triple-play services.

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This was true for Time Warner Cable (TWC), too. For Time Warner Cable’s Residential Services segment, the primary revenue growth drivers in 4Q15 were high-speed Internet and voice services. Growth in residential high-speed data revenue came from higher average revenue per subscriber and more high-speed Internet subscribers. The company recorded net additions of 281,000 subscribers in 4Q15 for high-speed Internet and had total high-speed data subscribers of 12.4 million in 4Q15.

Charter Communications (CHTR) had net customer additions of 82,000 in fiscal 4Q15 compared to 67,000 in 4Q14. Around 90% of Charter Communications’ residential customers opted for Charter Spectrum, which is a suite of triple-play services that includes video, Internet, and voice services.

Why are customers opting for double- or triple-play products?

Cable companies usually do not disclose the number of customers opting for bundled product services. However, high-speed Internet has become a necessity for consumers and businesses. This is partly due to the proliferation of electronic devices and an increasing number of people preferring to watch content that consumes a high amount of data. This trend is also evident by the increase in video and high-speed Internet customers for most major cable companies in the media sector.

Cable companies are also increasingly strengthening the content offered on their video services to compete against pure-play OTT (over-the-top) services like Netflix (NFLX). Time Warner Cable makes up 0.3% of the SPDR S&P 500 ETF (SPY). SPY invests 3.7% of its portfolio in the stock.

In the next part of this series, we will look at how cable companies are investing in technology to provide faster Internet speeds to their users.

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