Cable, Fiber, and Fixed Wireless Earnings: Key Insights to Consider

The telecommunications industry is undergoing significant changes, with fiber and fixed wireless access (FWA) increasingly challenging cable operators' dominance. As companies prepare for upcoming earnings reports, it’s crucial for investors and stakeholders to understand the dynamics between these market players. This article explores what to watch for in the upcoming earnings releases, highlighting key trends, challenges, and opportunities within the cable, fiber, and FWA markets.

Current Market Landscape

Declining Cable Earnings

Cable companies are facing challenges as their subscriber bases shrink, leading to revenue pressures. Analysts predict thin earnings for the cable industry as customers increasingly opt for more affordable options like FWA and fiber. Wolfe Research estimates that valuation multiples for cable firms are nearing “all-time lows.”

This situation could worsen, especially with the end of the US Affordable Connectivity Program (ACP), potentially increasing churn across all cable subscribers. Jeff Heynen from Dell’Oro Group suggests that cancellations due to ACP might result in higher churn in the third quarter compared to the second.

Growth in Fiber and Fixed Wireless

Fiber and FWA providers are experiencing growth, contrasting with the setbacks facing cable companies. Verizon, AT&T;, and T-Mobile are expected to report strong gains in their fiber and FWA segments. For instance, Verizon recently added 354,000 FWA subscribers in a single quarter, indicating strong demand. Similarly, T-Mobile is poised to add substantial FWA customers, targeting lower-tier broadband users seeking cost-effective services.

This growth can be attributed to several factors, including:

• Affordability: FWA services are generally cheaper than traditional cable broadband.
• Deployment Speed: The rapid deployment of FWA technology allows providers to quickly add new customers, especially in underserved areas.
• Consumer Demand: As the demand for reliable internet access grows, many consumers are turning to fiber and FWA.

Key Earnings Reports to Watch

Major Players

As the earnings season begins, here are highlights from key players in the US telecom industry:

Earnings Expectations

• Cable service providers are likely to report lower net broadband additions and increased churn due to competitive pressures from fiber and FWA services.
• Fiber providers are expected to show strong subscriber growth due to aggressive expansion plans and successful market penetration strategies.

Trends Influencing Earnings

Convergence of Services

Another factor driving changes in the competitive landscape is the convergence of mobile and fixed broadband services. Major telcos are leveraging their mobile networks to offer bundled wireless and broadband services, enhancing customer retention and positioning companies like Charter Communications and Comcast to compete effectively against traditional telecom giants.

Impact of Infrastructure Investments

Infrastructure investments are crucial for the growth of both fiber and FWA sectors. Many companies are expanding their footprints while simultaneously improving their wireless capabilities. For example:

Regulatory Environment

The regulatory landscape could also influence earnings outcomes. Recent discussions over net neutrality rules could reshape how broadband ISPs operate and price their services. Companies must navigate these regulations while maintaining competitive pricing and service quality.

Future Outlook

Long-Term Growth Potential

Despite a seemingly grim outlook for cable, there is potential for recovery as operators adjust their strategies. This suggests that cable operators might bridge the gap between lost EBITDA from FWA customers and gained EBITDA from mobile products. Fiber and FWA operators, on the other hand, are well- positioned for continuous growth, driven by:

• Expanding customer bases in areas where fiber and FWA services have penetrated.
• A growing preference for higher internet speeds among consumers.
• Leveraging existing infrastructure investments.

Technological Advancements

Technological advancements will also play a significant role in shaping future earnings. As 5G deployment continues, fixed wireless is likely to improve, allowing providers to offer faster speeds and higher reliability—key factors in attracting new customers.

Conclusion

As fiber and fixed wireless access providers intensify competition, cable operators brace for challenging earnings reports. Stakeholders remain vigilant, keeping an eye on market trends and company strategies. Changes in the US telecommunications industry present both challenges and opportunities for shaping its future.