TWC Earnings Preview: Broadband & Cable Subscriber Trends in Focus
Time Warner Cable's Subscribers (in thousands), Source: SEC Filings
Time Warner Cable (NYSE:TWX) will report its Q2 earnings tomorrow. The key metrics to watch for remain more or less the same as in past quarters: broadband subscriber growth, average revenuers per user (ARPU) and video subscriber growth. We compare these with metrics we follow for competitors like Comcast (NASDAQ:CMCSA) and satellite companies DirecTV (NASDAQ:DTV) and Dish Network (NASDAQ:DISH). Telecom operators like AT&T (NYSE:T) and Verizon (NYSE:VZ) are also competing with cable operators for juicy data, broadband & pay-TV revenues.
Our near $69 price estimate for Time Warner Cable is more than 10% below the market price.
- Time Warner Cable Q1 Review: High-Speed Data Leads Revenue Growth, Company Gains Pay-TV Subscribers
- How Are Time Warner Cable’s Revenue & EBITDA Composition Expected To Change By 2020?
- What Has Led To A ~20% Increase In Time Warner Cable’s Revenues & EBITDA In The Last Five Years?
- How Has Time Warner Cable’s Revenue Composition Changed In The Last Five Years?
- How Much Can Time Warner Cable’s Revenues Grow Over the Next Five Years?
- What’s Time Warner Cable’s Fundamental Value Based On Expected 2016 Results?
Industry Trends in Play
Time Warner Cable faces the same issues as the whole cable industry, which is the loss of pay-TV subscribers to satellite, telecom and Internet based competitors. Although we expect gains in digital cable subscribers, we should see losses of basic cable subscribers as this group continues to explore multiple sources of content from other service providers. We note that overall net losses have been slowing, and we expect Q2 to provide additional evidence to support that.
Watch Out for Growth in Broadband Subscribers and ARPU
Despite the losses mentioned above, Time Warner Cable has performed well financially due to a gain in broadband subscribers and healthy ARPU trends in both broadband and digital cable recently. We expect that these gains will overshadow video subscriber losses and positively affect the company’s financials. Time Warner continues to market high speed Internet and has observed promising adoption of higher priced tiers that boost its ARPU.