Comcast (NASDAQ:CMCSA) has seen growth in its voice business in the recent past, primarily due to its double and triple play bundling options. The company offers voice service plans using an interconnected voice over Internet protocol (VoIP) technology. The VoIP industry has been growing strongly in recent years and it appears this trend will continue due to the considerable cost savings VoIP offers as compared to the traditional fixed telephone lines. Cable companies largely dominate the VoIP market in the U.S. Comcast currently commands close to 25% market share in the industry. However, as VoIP continues to grow, Comcast’s share is expected to decline due to the increased competition, especially from mobile VoIP.
Healthy Growth In VoIP
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According to a research by Visiongain, global VoIP market revenues will reach $75.8 billion in 2013, driven by increasing adoption of mobile and enterprise based VoIP services.  In the U.S., the VoIP market has experienced 17% annual growth rate over the last five years and generates $15 billion in annual revenue. Cisco’s Visual Networking Forecast predicts that Internet protocol (IP) traffic will at least triple within the next five years and VoIP will play a significant role in that growth by gradually replacing the traditional telecommunications methods. 
Comcast Continues to Gain VoIP Subscribers
In the U.S., an estimated 39 million people already use a VoIP connection in their home. Interestingly, 65% of these users are serviced through cable companies such as Comcast, Time Warner Cable (NYSE:TWC) and Cox Communications due to their ability to offer bundled packages.  These companies offer VoIP based fixed telephone line along with the broadband connection or pay-TV or both in a single subscription package. Comcast itself has been marketing its double and triple play offerings and has gained voice subscribers in the recent past. The company has seen a steady growth in its voice subscribers from 4.6 million in 2007 to 8.6 million in 2010 and 10.3 million currently.  The company reported voice revenues of $1.8 billion during the first half of 2013, an increase of 2.5% over the same period previous year. With an estimated fee per subscriber of around $35.6, we estimate the 2013 full year revenues to be around $4 billion.
Comcast’s Fixed Line VoIP Threatened by Mobile VoIP
As of 2012, VoIP penetration in the fixed telephone lines was only 28% (estimated). While this will continue to grow, primary boost in VoIP is expected to come from mobile segment. The deployment of LTE and 4G networks will transform the quality of VoIP services, which will lead VoIP into mainstream mobile telecommunication services. An increased penetration in the mobile VoIP will translate into reduced reliance on fixed telephone lines including the ones with VoIP. Therefore, Comcast has little to gain from the boom in VoIP. As a result, we believe that this business will have minimal contribution to Comcast’s overall value.Notes:
- THE VOICE OVER INTERNET PROTOCOL (VOIP) MARKET 2013-2018, Visiongain Press Release, Sep 4, 2013 [↩]
- U.S. VoIP market generates $15 billion in annual revenue, FierceEnterpriseCommunications, Jan 4, 2013 [↩] [↩]
- Cocmast’s SEC Filings [↩]