Dell’Oro, a market research firm specializing in networking and telecommunications, forecasts 35% growth in 2010 for VoIP subscribers in the US, driven by rising demand for VoIP services and aggressively priced digital phone bundles by providers like Comcast (NASDAQ:CMCSA).
We estimate that VoIP (digital phone service) constitutes about 19% of Comcast’s stock, and if Dell’Oro forecasts were to materialize, there could be an upside of 3% to the $18.65 Trefis price estimate for Comcast’s stock.
Below we discuss the impact of Dell’Oro forecasts on VoIP penetration in the US, how Comcast can increase its revenues by 30% by maintaining VoIP market share, and how the higher VoIP subscriber base will lead to a small upside for Comcast’s stock price.
Dell’Oro Forecasts Imply US VoIP Penetration of 39% in 2010
We estimate that VoIP penetration in the US is about 31% amongst broadband subscribers as of 2009. This translates into a VoIP subscriber base of close to 25 million. While we estimate VoIP penetration to reach 35% by 2010, Dell’Oro forecasts a 35% subscriber growth, implying a higher VoIP penetration of about 39% in 2010.
A 39% VoIP penetration will result in a subscriber base of close to 33 million by end 2010. Extrapolating Dell’Oro’s forecast will result in 63% growth in VoIP penetration over our forecast period versus the 57% growth that we forecast.
If Comcast Can Maintain VoIP Market Share, Its Revenues Will Grow By 30% In 2010
If Comcast can maintain its VoIP market share, its subscriber base will grow by 35%, similar to that for total US VoIP subscriber base. However, we forecast 30% growth in Comcast’s VoIP revenues for 2010 as a result of expected decline in fee per subscriber.
This decline in fee per subscriber will be driven by aggressively priced bundles that in turn will drive demand for VoIP service, thereby providing an overall benefit to Comcast.
3% Upside To Comcast’s Stock From Rising VoIP Subscribers and Declining Subscriber Fee
Higher US VoIP penetration will have a small impact on Comcast’s stock. Falling fee per subscriber and rising VoIP subscriber base could result in a minor upside about $0.60 (3%) for $18.65 Trefis price estimate for Comcast’s stock.
You can modify our forecasts for Fee per subscriber and VoIP penetration to see how they will impact Comcast’s stock price.
For additional analysis and forecasts, here is our complete model for Comcast’s stock.