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TWC reports robust Q4, outlines plan for more IP streaming

Thu, 01/26/2012 - 2:36pm
Mike Robuck

After launching its iPad video app early last year, Time Warner Cable will be sending live video streams to even more devices – including PCs and Macs, game consoles, and Internet-connected TVs – around the home over the coming year.

During this morning's fourth-quarter earnings call, Time Warner Cable President and chief operating officer Rob Marcus outlined the company's major initiatives slated for this year. While Marcus didn't say what smart TVs would be able to access Time Warner Cable's IP video streaming, the company does have a long history with Samsung.

Also coming down the IP pipe: live streaming "very soon" to Android devices and tablets that use the newest Android operating system. Last week, Time Warner Cable rolled out its TWC TV live streaming app to iPhone and iPod Touch devices.

Also on the 2012 engineering to-do list:

  • Complete the rollout of DOCSIS 3.0, which is currently in 76 percent of Time Warner Cable's footprint. Time Warner Cable added a record number of wideband users, 54,000, in the fourth quarter.
  • Improve the traditional video experience by enhancing its VOD portal and moving to a uniform, genre-based national channel lineup.
  • Deploy up to 10,000 Wi-Fi access points in Los Angeles and other areas of the company's footprint.

Marcus said Time Warner Cable has outfitted 1,200 Wi-Fi access points in Los Angeles since it was launched in September.

"They seem to love it," he said. "Our customers have used almost 10 terabytes of capacity in the four months since the launch."

Marcus said that the deal to sell its AWS spectrum to Verizon Wireless, which also includes Bright House Networks, Time Warner Cable, Comcast and Verizon Wireless selling each other's services, complements Time Warner Cable's Wi-Fi strategy.

Time Warner Cable plans to launch its reselling agreement with Verizon Wireless in the first half of this year in several cities. Marcus said he expects the packages to be similar to those that Comcast and Verizon Wireless recently started offering in the Pacific Northwest.

Also this year, Time Warner Cable CEO Glenn Britt said the company plans on offering its IntelligentHome security service, which is currently in five cities, in more areas and launch its regional sports networks in Los Angeles and other areas of California.

"As always, we will make capital investments in our infrastructure to enable future growth and allow for the continued best-in-class delivery of our products and services," Britt said. "Projects include the expansion of our content delivery network – which powers our IP video capability – our two national headends, completion of our DOCSIS 3.0 deployment and conversion of all-digital in more cities."

Fourth-quarter numbers
Time Warner Cable surpassed analysts' expectations for the fourth quarter, as its earnings increased 44 percent to $5 billion. Analysts had projected earnings of $4.97 billion. Today's results didn't reflect the sale of the AWS spectrum to Verizon Wireless or the deal to acquire Insight Communications, the latter of which is expected to close over the next few months.

The second-largest cable operator's net income increased to $564 million from $392 million a year ago. Excluding certain items, its earnings per share increased to $1.39 from 99 cents, beating the $1.20 average by analysts.

Business services and data were the rock stars of Time Warner Cable's fourth-quarter numbers. With the addition of cloud vendor NaviSite, which the company bought last year, business services revenue increased by 37 percent to $409 million.

"Business services continued to be our biggest success story, aided by the NaviSite acquisition," Britt said. "Even without NaviSite, business services revenue was up 25 percent, making Q4 the highest growth quarter of the year."

Marcus said this year's plan for business services included four key areas: driving single-service business customers to double- and triple-play bundles, moving up into the mid-market sector to sell more dedicated Internet access and metro Ethernet services, expanding the number of serviceable commercial establishments, and "adding feet on the street" with a larger sales force.

Britt also reiterated that Time Warner Cable's fortunes continue to prosper on its data services. For the quarter, the company added 117,000 new data subscribers, with roughly one-third of those additions coming from the Turbo or higher data tiers.

"Broadband was the real success story in the fourth quarter," Marcus said. "Connects were up each month versus comparable months in 2010, and fourth-quarter residential broadband net adds increased over 40 percent on a year-over-year basis."

Time Warner Cable lost 129,000 video customers in the fourth quarter, but Marcus noted that was 9 percent less than it lost in the same quarter a year ago. On the telephony front, Time Warner Cable added 37,000 new subscribers.

Time Warner Cable also announced a $4 billion stock buyback program this morning.

"In summary, our 2011 results demonstrate the continued resilience of our business in this rapid change technology and the consumer marketplace," Britt said. "We continue to make important progress in what has been a long-term evolution from a company focused only on residential video to one whose growth is now increasingly generated by residential high-speed data and business services."

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