Comcast Corp. shares fell by as much as 8% to $24.19 on Wednesday after Chief Financial Officer Jason Armstrong indicated that the company does not anticipate an improvement in broadband subscriber losses for the current quarter. Armstrong attributed this trend to intense competition, with rivals offering fiber internet services at prices he deemed "irrational," specifically mentioning gigabit speeds for $30-$40 per month. This aggressive pricing makes it difficult for Comcast to achieve a return on investment, according to Armstrong, who made these remarks at a Goldman Sachs Group Inc. conference.
Comcast is facing significant pressure from cable and wireless providers that are bundling home internet and mobile plans to attract and retain customers. For instance, Charter Communications Inc. offers a one-gigabit plan for $60 per month for a year, while Optimum Communications Inc. advertises a one-gig fiber plan for $25 per month. Verizon Communications Inc. promotes its Fios fiber plan for $30 per month, although gigabit speeds cost $80. In contrast, Comcast is currently advertising its Xfinity internet service at $50 monthly for gigabit speeds.
Armstrong also mentioned that the company expects modest improvements in its third-quarter earnings before interest, tax, depreciation, and amortization (EBITDA), and forecasts better broadband customer trends for the full year. However, he noted that the "softness in Orlando" observed in the second quarter for Comcast's theme park business is continuing, partly due to macroeconomic factors like gas prices and airfare. The company has recently announced a plan to separate its media properties from its connectivity businesses.
