Comcast. The company’s financial results are interesting. Revenues for the whole corporation for 3Q 2020 dropped 4.8% compared to a year earlier, EBITDA dropped 11.3%, and net income dropped 37.2%. The big drops are due to the entertainment parts of the company and Comcast did well in the telecom space. The company added 323,000 new broadband customers in the third quarter but lost 478,000 cable customers. Telecom EBITDA grew by 10.5%, demonstrating the big difference in margin between broadband and cable customers.
AT&T. Revenues dropped 5.2% compared to the third quarter of 2019. AT&T did a good job of managing expenses and margins dropped from 22.2% to 19.4%. The company added over 1 million net new wireless customers. AT&T reported something that we need to remember about the whole ISP industry this year – it added 357,000 customers to fiber, but only 28,000 are paying customers. AT&T, like other ISPs provided some free connections for students and also is not disconnecting customers for non-pay. The company lost over 800,000 video customers, mostly at DirecTV, but is seeing good growth with AT&T TV and HBO.
Charter. The company weathered COVID better than most other telecom companies. Revenues were up 5.1% compared to a year earlier. This was driven by an increase of 850,000 broadband customers and an increase of 94,000 cable customers. Not all of the broadband customers are paying and the company claims 537,000 net gains in paying customers. Charter also added 363,000 cellular customers during the quarter.
Verizon. Revenues are down 4.1% compared to a year earlier. Overall earnings were down 4.3%. The company added over 400,000 wireless customers. The company added 144,000 net customers to FiOS fiber, the biggest quarterly gain since 2014. Unlike Comcast and AT&T, the company didn’t have a non-telecom business pulling down the bottom line.
Telco Vendors. There were mixed results for worldwide telco vendors. Capital spending by the big telcos dropped, resulting in overall lower revenue for many vendors. However, Huawei and ZTE revenues were up 26%, driven by the Chinese governments spending for 5G. All other vendors collectively saw a 1% drop in revenues for the quarter. Fujitsu revenues were up 12% for the quarter, representing continued big growth for fiber backhaul. Ericsson was up 9%, driven by 5G electronics. Intel was up 4%, driven largely by sales of smartphone chips. But other vendors weren’t so lucky. Corning revenues were down 4%. Cisco sales were down 6%, and CommScope sales were down 11%. Samsung was down almost 15%.
Upcoming Trends. Analysts predict some of the following trends for the big players in the industry:
- Fiber buildout to small cells should pick up again in 2021 to pre-pandemic levels.
- Sales of operating software will grow faster than sales of hardware.
- Most big telcos are likely to reduce staff in 2021.
- Overall capital spending is likely to grow around 4%, bringing the industry back to pre-pandemic levels.
- Telcos will pause to investigate before stepping into open RAN.
- While there will be continued spending on 5G infrastructure, there is no expectation of net revenue increases due to 5G technology.