US cable operators Comcast and Charter Communications continued to rack up mobile subscriber gains in Q1 through their MVNO agreements with Verizon, which lost post-paid customers in the quarter.

Charter Communications and Comcast are the two largest cable companies in the US, and their mobile adds in the quarter are more of a mounting trend than a flash in the pan.

Charter Communications’ Spectrum One mobile offering reeled in 514,000 new subscribers in the quarter, up 4.8 per cent from a year ago. Comcast’s Xfinity Mobile added 323,000 mobile lines after posting a gain of 289,000 a year ago.

Due in part to plan increases, Verizon reported pre-paid net losses of 289,000 compared with 114,000 a year ago. Analysts predicted a loss of about 218,000.

AT&T and T-Mobile US both recorded post-paid additions in the quarter with 324,000 and 495,000 respectfully.

Comcast launched Xfinity Mobile in 2017 while Spectrum One made its debut a year later. During those years, both cable companies were broadband powerhouses while the mobile services were viewed more as customer retention offerings.

MoffettNathanson senior MD Craig Moffett stated in research notes last week that mobile services are now key financial drivers for Comcast and Charter.

He explained Charter adopted a “lead with mobile strategy” two years ago, which included a free mobile phone line for new and existing customers, but noted “Comcast is only now adopting that strategy”.

“It is easy to see why Comcast wants to copy Charter’s approach,” he wrote. “Charter’s approach is working.”

He stated while subscribers were attracted to Charter’s free phone line offering, it is clear they “are staying when their prices step up”.

In March, Comcast started offering a free line of Xfinity Mobile for one year to home subscribers off some of its mid-to-high priced broadband plans.

Moffett stated while AT&T, Verizon and T-Mobile US talk constantly about convergence of their mobile and fibre services, each of their fibre footprints cover less than 15 per cent of their national wireless footprints, and collectively cover less than half of the US.

“Cable wireless, by contrast, is everywhere,” he stated. “Cable’s wireless proposition to customers couldn’t be simpler: same product, lower price.”

MVNO renewals
During Verizon’s Q1 earnings call on 23 April, Moffett asked Verizon CEO Hans Vestberg about upcoming renegotiations of the MVNO agreements with cable operators without mentioning Comcast and Charter by name.

Vestberg answered that he could not dive deep into Verizon’s MVNO relationships but stated the company’s strategy “is to build a network once and have as many profitable connections on top of it”.

 “I would say we have a very good relationship with our MVNO partners,” Vestberg said. “We continue to have a good conversation with them and offering them service on the best network in the United States.

“That’s the only thing I can say, but this is an accretive business for us that is important in our overall strategy.”