Comcast's Q3 2025 Earnings Call Contradictions: Convergence Revenue, ARPU, Wireless Strategy, and Churn Divergences

Date of Call: None provided

Financials Results

• Revenue: Total company revenue declined about 3% YOY (impact from Paris Olympics); excluding the Olympics, revenue increased nearly 3%
• EPS: Adjusted EPS was consistent with last year (no dollar EPS provided)

Guidance:

• Connectivity & Platforms (CMP) EBITDA expected to face continued near-term pressure as investments in pricing, product, and customer experience continue.
• Broadband ARPU growth to step down >1 point in Q4 and management does not plan a broadband rate increase in early 2026.
• Many free wireless lines added in 2025 are expected to be monetized in the second half of 2026, with the intention to convert the majority to paying lines.
• Sports rights amortization will cause upfront EBITDA dilution in the first season, offset over time by advertising growth.
• Capital allocation: invest organically, maintain strong balance sheet, return capital to shareholders.

Business Commentary:

• Broadband Market Strategy and ARPU Trends:
• Comcast's broadband ARPU growth decelerated to 2.6% in Q3, with expectations for further deceleration to over a point in Q4 and early 2026.
• The company is migrating customers to new pricing and packaging, including nationwide offers and five-year price guarantees, which temporarily impact ARPU.

• The strategy aims to stabilize the broadband base in a competitive environment, focusing on long-term revenue growth despite current ARPU pressures.

• Connectivity and Platforms EBITDA Impact:

• Connectivity and Platforms EBITDA declined by 3.7% in Q3, reflecting investments in pricing, product, and customer experience.

• These investments are expected to continue impacting EBITDA in the coming quarters as Comcast positions itself for future growth in a competitive market.

• Wireless Growth and Convergence:

• Comcast's wireless business showed strong performance with 414,000 net additions in Q3, surpassing 14% penetration of the broadband base.

• The introduction of new premium unlimited plans and free mobile line promotions have driven wireless growth, positioning Comcast for convergence revenue growth in the future.

• Sports and Media Performance:

• NBC Sports experienced strong viewership and advertising performance, with 2.6% year-over-year growth in advertising revenue driven by live sports.

• Continued investment in sports rights and partnerships, such as the NBA on NBC and Peacock, is expected to enhance NBCUniversal's media ecosystem.

• Parks and Studios Financial Performance:

• Universal Parks' revenue grew by 19% in Q3, with EBITDA increasing by 13%, driven by the opening of Epic Universe Orlando.
• Revenue growth in the studios segment was supported by the successful performance of Jurassic World Rebirth, contributing to a 7 billion cumulative box office for the franchise.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted strong free cash flow (+45% to $4.9B), returned $2.8B to shareholders, theme parks revenue +19% and wireless growth (414k net adds, wireless lines ~9M). They acknowledged near-term EBITDA headwinds from a broadband pivot but emphasized long-term positioning, convergence upside, and Peacock improvement (nearly $220M y/y improvement in losses).

Q&A:

• Question from Michael Rollins (Citibank): Could you share more context on ARPU evolution, migration to new plans, retention opportunities, and whether convergence growth (2.5% in the quarter) should improve over time?
  Response: Management: Near-term ARPU pressure is expected (Q4 and into early 2026) due to migration to simplified pricing and free mobile-line promotions; these moves dilute revenue now but are intended to stabilize churn and drive stronger convergence monetization when free lines convert to paying customers.

• Question from Michael Lang (Goldman Sachs): Can you discuss the trajectory of CMP EBITDA next year and the operating investments (CPE, sales, marketing, customer service) supporting the reset?
  Response: Management: CMP EBITDA will see near-term declines as they reinvest in pricing, gateways/CPE, marketing, sales, and customer experience; cost rationalization continues but investments are deliberate to achieve longer-term stable growth.

• Question from Craig Moffitt (Moffitt Nathanson): Thoughts on potential WBD assets (complementarity, political/transaction feasibility) and implications of Verizon leadership change on your MVNO relationship?
  Response: Management: The M&A bar remains high; NBCU’s strategy (including Versant spin) positions it well without needing M&A, though complementary streaming/studio assets could be contemplated post-spinoff; Verizon leadership change is not expected to materially disrupt their important partnership.

• Question from Ben Swinburne (Morgan Stanley): How will you ensure quality and conversion of free wireless lines to paying next year, and update on Epic Universe ramp and operating leverage?
  Response: Management: They will target higher-quality customers, use proactive conversion strategies, and expect to convert the majority of free lines to paying relationships; Epic Universe is ramping capacity (increasing ride throughput) to drive higher attendance, per-cap spending, and improved operating leverage over the next year.

• Question from Jessica Reif (Bank of America): Plans to scale Peacock globally and need for M&A; and commentary on advertising trends and programmatic impact?
  Response: Management: NBCU believes it can scale via premium content and sports without required M&A; advertising momentum is positive (advertising up ~2.6% excluding Olympics; Peacock revenue grew mid-teens on same basis) with growing programmatic/digital demand supporting monetization.

• Question from John Hudlig (UBS): Is there evidence that wireless/convergence is lowering broadband churn, and how do you view competition in the business market?
  Response: Management: Adding wireless relationships reduces churn over time and the free-line promotion accelerates that effect; business services remain competitive (notably fixed wireless pressure) but trends are solid with upside from expanded advanced services and mobile for business.

Contradiction Point 1

Convergence Revenue and ARPU Expectations

It involves differing expectations and strategies regarding convergence revenue and ARPU, which are key metrics for revenue growth and financial performance.

What is the outlook for future convergence revenue growth following the 2.5% growth in the quarter? - Michael Rollins(CitiBank)

2025Q3: We're in a transition period, but the mandate is to move customers to new packaging as quickly as possible. This will create some ARPU pressure, but it sets us up for the other side. The strategy is to be competitive in broadband pricing and retain customers with free wireless lines, which will become a tailwind for revenue. - Jason Armstrong(CFO)

What are expectations for back-half convergence revenue, and what is the 2025 cash tax projection? - Ben Swinburne(Morgan Stanley)

2025Q2: We expect convergence revenue metrics to be impacted by ARPU moderation and free line strategies. ARPU is expected to stabilize over a year. - Jason S. Armstrong(CFO)

Contradiction Point 2

ARPU Growth Strategy and Impact of Wireless

It involves the company's strategy for ARPU growth and the impact of wireless on this growth, which are critical for financial forecasting and investor expectations.

How has ARPU evolved with customer migration to new plans? - Michael Rollins (CitiBank)

2025Q3: Given the investments we're making, we expect ARPU to decline in 2026. - Dave Watson(CEO)

What is the outlook for domestic broadband ARPU growth? - Michael Ng (Goldman Sachs)

2024Q4: We expect continued healthy ARPU growth. - David Watson(CEO)

Contradiction Point 3

Wireless Strategy and Impact on Churn

It involves the company's wireless strategy and its impact on churn, which are key factors affecting customer retention and revenue.

Are wireless and convergence reducing churn? - John Hudlig (UBS)

2025Q3: Wireless has a positive impact on churn. - Dave Watson(CEO)

Can you explain the wireless strategy shift and its expected impact on net adds? - Benjamin Swinburne (Morgan Stanley)

2024Q4: We're shifting strategy to include mobile in high-end broadband packages. - David Watson(CEO)

Contradiction Point 4

Churn and ARPU Impact from Wireless and Convergence Strategy

It involves the impact of the company's wireless and convergence strategy on churn and ARPU, which are key performance indicators for the company's growth and financial health.

Is there evidence that wireless and convergence are reducing churn? How is competition evolving in the business market? - John Hudlig(UBS)

2025Q3: Wireless has a positive impact on churn, and we're encouraged by the early results. - Dave Watson(CEO)

How much of the broadband loss is due to slower industry growth vs. market share changes? Does performance differ between existing fiber markets and new fiber introductions? - Michael Rollins(CitiBank)

2025Q1: Competition is intense, with fiber and fixed wireless overbuilding. Churn has increased slightly but remains below pre-pandemic levels. - David Watson(CEO)

Contradiction Point 5

ARPU Growth and Impact of Pricing and Packaging Changes

It involves the company's expectations for ARPU growth and the impact of pricing and packaging changes, which are crucial for understanding revenue trends and customer retention.

How has ARPU evolved with customer migration to new plans? How do transition costs impact revenue? - Michael Rollins(CitiBank)

2025Q3: We're actively migrating customers to new pricing and packaging with lower EDPs and eligible for free mobile lines. - Dave Watson(CEO)

What drives broadband ARPU growth? How will new pricing and packaging affect ARPU growth? - Michael Ng(Goldman Sachs)

2025Q1: ARPU growth is driven by addressing customer pain points and simplifying pricing. - David Watson(CEO)