Comcast’s Capex Is Growing at a Rapid Pace



Comcast’s capital expenditure

There has been a shift in Comcast’s (CMCSA) capex trend. The cost of rolling out its CPE (customer premise equipment) is declining as a percentage of total capex. However, the company’s investment in network infrastructure is on the rise. 

As a result, in fiscal 2017, Comcast expects Comcast Cable’s capital expenditure as a percentage of revenue to stay flat at 15%, which means it expects the segment’s absolute capital expenditure to rise.

In 1Q17, Comcast’s capex was $2.1 billion, up 10.2% year-over-year. Comcast’s Cable segment saw its capex rise 13% to $1.8 billion in 1Q17. Higher expenses related to the rollout of as a result of deployment of the X1 set-top box and wireless gateways led to a rise in capex.

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Comcast’s programming costs

Comcast’s programming costs are also increasing, mainly due to renewals of programming contracts that began in 2H16 and are likely to continue throughout 2017. The company also stated during its 1Q17 earnings call that it expects its Comcast Cable operating margin to stay flat or fall 50 basis points in fiscal 2017.

Comcast expects its programming costs to moderate, reaching “mid- to high-single-digit levels” over time. A primary reason for the climb in programming costs has been the rising expense of acquisition of sports broadcasting rights and higher retransmission fees.

However, Comcast stated during its 1Q17 earnings call that it expects its non-programming costs to be lower in 2017 compared to 2016. The company plans to continue its focus on effective cost management.

Comcast makes up 0.89% of the SPDR S&P 500 ETF (SPY), which has an exposure of 4.2% to the Computers sector.


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