Cable TV

Q1-16: Time Warner Cable adds 21K video subscribers; revenue & income up

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BENGALURU:  Following on from the previous quarter’s reversal in subscriber acquisitions, US triple play services player Time Warner Cable Inc., (TWC) reported net addition of 21,000 Video subscribers in the quarter ended 31 March 2016 (Q1-16, current quarter). Last quarter (Q4-15), for the first time since 2006, TWC had reported net video subscriber additions.

The company reported best ever customer relationship net additionsfor Q1-16across the three services that it provides.Customer relationship net additions for Q1-2016 were 236,000 with Video net additions of 21,000, High-speed data net additions of 314,000 and Voice net additions of 178,000.

Revenue grew 7.2 percent for Q1-16 to $6,191 million from $5,777 million, the highest first-quarter organic revenue growth in the last 8 years, which TWC says was driven by accelerated growth in Residential Services and strong growth in Business Services.

Adjusted OIBDA was up 8.2 percent to $2,199 million for Q1-16 from $1,996 million in Q1-15. This again was the highest first-quarter organic Adjusted OIBDA growth in the last 6 years.Operating Income increased 5.6 percent to $1,145 million from $1,094 millionwhich TWC says reflects higher depreciation expense from TWC Maxx and other capital investments.

Company speak

TWC chairman and CEO Rob Marcus said: "Our first-quarter results are the clearest indication yet that our efforts over the last 27 months are paying off. We have made our network more reliable, our products more compelling and our customer service far better. We’ve refined our marketing, enhanced our sales channels and strengthened our retention capability. All of that has driven robust customer growth, which in Q1 translated into very strong revenue and OIBDA growth. I couldn’t be prouder of what our talented, committed, passionate team has accomplished.”

Segment numbers

Residential Services

Residential Services revenue in Q1-16 increased as a result of increases in High-speed data, Video and Voice revenue which were driven by growth in subscribers across all the three services. Residential Video and High-speed data were also boosted by higher average revenue per user (ARPU), while Voice revenue growth was offset by lower ARPU.

Residential Video services revenue increased 1.6 percent year-on-year (YoY) to $2,508 million in Q1-16 as compared to $2,468 million in Q1-15. Residential High speed data revenue increased 11.9 percent YoY in the current quarter to $1,897 million from $1,696 million. Residential Voice revenue increased 6.6 percent YoY to $504 million in Q1-2016 from $473 million. ‘Other’ revenue increased by $one million (4.2 percent) in Q1-16 to $25 million as compared to $25 million in Q1-15.

Residential Services Adjusted OIBDA increased 5.4 percent YoY in Q1-16 to $2,193 million from $2,087 million driven by the increase in revenue, partially offset by a 6.2 percent increase in operating costs. The increase in operating costs resulted from higher programming, sales and marketing and technical operations costs, partially offset by a decrease in other operating costs. Programming costs per video subscriber increased 8.8 percent in Q1-16 to $46 from $42.28 in Q1-15. Voice costs per voice subscriber declined to $3.30 in the current quarter from $3.68 in the corresponding year ago quarter.

ARPU

Total Residential Customer Relationship consolidated ARPU increased 2.5 percent to $129.06 in Q1-16 as compared to $125.94 in Q1-15. NetResidential Customer Relationship ARPU in the current quarter increased 1.4 percent to $107.96 as compared to $106.46 in Q1-15.

Residential Customer Relationship Video ARPU increased 1.3 percent to $77.25 in Q1-16 from $77.26 in Q1-15. Residential Customer Relationship speed data ARPU increased 3.1 percent in the current quarter to $49.32 from $47.82 in Q1-15. Residential Customer Relationship Voice ARPU in Q1-16 declined 9.6 percent to $26.23 from $29 in Q1-15.

Business Services

Business Services revenue (BS) growth was primarily due to increases in high-speed data and voice subscribers and growth in wholesale transport revenue. BS revenue increased 13.4 percent YoY in Q1-16 to $886 million from $781 million in the corresponding quarter of last year.

The segment’s Adjusted OIBDA grew 11.9 percent YoY to $536 million in the current quarter from $479 million in Q1-15. Adjusted OIBDA increasewas driven by growth in revenue, partially offset by a 15.9% increase in operating costs and expenses, primarily due to increased headcount and higher compensation costs per employee, as well as growth in programming, voice and marketing costs.

BS Video revenue grew 6.4 percent YoY in Q1-16 $100 million form $94 million. BS High speed data revenue grew 18.9 percent to $447 million in Q1-16 as compared to $376 million in the corresponding quarter of the previous year. BS Voice revenue in Q1-16 increased 13.4 percent YoY in the current quarter to $161 million from $142 million in the corresponding year ago quarter. BS Wholesale transport revenue increased 7.4 percent YoY in Q1-16 to $130 million from $121 million. ‘Other’ revenue remained flat at $48 million for Q1-16 and Q1-15.

Other Operations

Other operations include Advertising. Total revenue from other operations increased 10.6 percent to $244 million in Q1-16 from $230 million in Q1-2015. Adjusted EBIDTA increased 18.4 percent YoY in the current quarter to $193 million from $163 million.

Advertising revenue in Q1-16 increased 6.1 percent to $244 million from $230 million in Q1-15.  Advertising revenue increased primarily due to growth in political advertising revenue.‘Other’ revenue increased 16.7 percent YoY in the current quarter to $196 million from $198 million.Other revenue increased primarily due to the recognition of approximately $20 million of revenue associated with the settlement of a contractual dispute, as well as an increase in affiliate fees from the Residential Services segment and other distributors of the Los Angeles Lakers’ regional sports networks and SportsNet LA.

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