Comcast's Strong Q4 2015 Earnings Fortified By Big Gains In Business Services Division

Strengthened by its business services unit, telecom and cable behemoth Comcast posted better-than-expected fourth quarter 2015 earnings across the board Wednesday, up nearly 20 percent compared with the year-earlier quarter.

Comcast's business services segment earned $1.3 billion in revenue during the last quarter of 2015, up 19 percent from Q4 2014. These numbers were anchored by robust gains in its small to midsize (SMB) business services division -- boosted with the help of the channel, partners said.

Comcast's SMB business services stand out among those of its competitors and are popular with channel partners, according to Andrew Gregoire, CEO of ACE Consulting Group, a Fairhaven, Mass.-based provider of consulting services for cloud, voice and IT management services and Comcast partner.

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"Comcast is really jumping on the small business market. Small business [customers] get a higher bandwidth at a lower rate, nine times out of 10 -- that's what I'm selling," he said.

New Horizon Communications, a Lexington, Mass.-based solution provider and Comcast partner, agrees that agents are responsible for some of the provider's business segment growth, said Eric Hammare, New Horizon's vice president of sales.

"Without having an agent or partner program in place, you limit the access to all those potential customers with loyalty to their agent," Hammare said.

While the cable giant's small business segment generates the majority of its business revenue, the provider's recently launched enterprise division is also seeing some "good early traction," according to Comcast Chairman and CEO Brian Roberts.

"There's some interest there, but it's still going to be a little while before [the enterprise segment] ramps up -- maybe sometime next year," ACE Consulting's Gregoire said.

Comcast's strong earnings were further bolstered by revenue from its high-speed Internet business, which grew about 10 percent during the quarter, up to $3.2 million from $2.9 million in Q4 2014. Internet customer additions rose 23 percent, to 460,000. However, voice revenue declined 1.7 percent, to $89 million, in Q4 2015, according to the Philadelphia-based provider.

"Business services has strong positive momentum and continues to represent a large and attractive growth opportunity for the company," said Mike Cavanaugh, CFO of Comcast.

Like its competition in the telecommunications space, Comcast will also be filing to participate in the upcoming spectrum auctions, Cavanaugh said.

Overall, Comcast surpassed analyst expectations of $18.76 million, earning $19.08 million in Q4 2015, up from $17.73 million in Q4 2014. Earnings per share rose from 77 cents in Q4 2014 to 81 cents for the quarter, just missing the Thomson Reuters consensus estimate of 82 cents.

Free cash flow decreased about 6.3 percent in the quarter, to $1.6 billion, compared with $1.7 billion in Q4 2014. The decline was attributed to growth in consolidated operating cash flow and lower cash taxes, offset by higher capital expenditures and increased working capital, Cavanaugh said.

Comcast added 89,000 TV customers during the last three months of 2015, its best fourth quarter in eight years, according to the company. For the full year, Comcast lost 36,000 TV customers, which the company noted was its smallest drop since 2007. Comcast attributed this to the success it's seeing with "skinny bundles," a less expensive offering that includes local TV channels and Internet.