Broadband Slowdown Forces Analyst to Go Negative on Cable Sector

Fueled by the slowdown of broadband subscriber additions, Wells Fargo media analyst Steven Cahall estimates that as penetration rates rise and DSL competition sputters, the cable sector could be entering a period of diminished profitability. Most cable operators have warned that subscriber additions would be lower as pandemic lockdowns disappeared and workers returned to their offices. But adding to the pressure is increased penetration of homes with annual household incomes above $25,000 — now at about 100 percent — and the continued slide of digital subscriber line (DSL) service. Cahall said that slower-speed DSL, a ripe target for cable broadband service, especially in rural markets, has seen its penetration rates dip from 25 percent about five years ago to 14 percent in 2021. Comcast said in September 2021 that it expects broadband growth to soften in Q3, and Altice USA CEO Dexter Goei shook the market when he said the operator would lose between 15,000 and 20,000 broadband customers in Q3. For the full year, Cahall predicts cable broadband subscribers will rise by 2.9 million (down from his previous estimate of 3.2 million), slipping to 2.4 million additions in 2022 and 2 million by 2023.