Time Warner Cable CEO Rob Marcus outlined several of the company’s top priorities during this morning’s second quarter earnings call, which included the announcement that seven cities are slated to receive TWC Maxx network upgrades next year.
TWC Maxx, which includes analog to digital conversions and a data tier that features 300 Mbps on the downstream, will touch down in Charlotte, Dallas, Hawaii, Kansas City, Raleigh, San Antonio and San Diego. This year TWC Maxx moves to Austin, which wasn’t a surprise given that Time Warner Cable had previously announced the launch of its 300 Mbps tier there.
“That means by the end of next year, all of the benefits of Maxx, including the 300 megabits per second HFC speeds and more advanced all digital video will be available to roughly 6 million TWC customers,” Marcus said.
Time Warner Cable competes with Google Fiber, AT&T and Grande Communications in Austin, with all three either offering or planning to offer a 1-Gig service over fiber.
Time Warner Cable first outlined TWC Maxx in its fourth quarter earnings call earlier this year. The conversion to all digital is already complete in New York City and is on track to be finished in TWC’s Los Angeles footprint by the end of the year.
Marcus said that Time Warner Cable had deployed more than half a million digital terminal adapters (DTAs) in Los Angeles, with the bulk of those self-installs by subscribers.
“On the broadband side, we now have TWC Maxx speeds of up to 300 megabits per second available to hundreds of thousands of customers,” Marcus said. “We expect to reach 3 million customers by year end.
“We’re feeling our so good about our TWC Maxx program that we’ve decided to accelerate our rollout and designate Austin Texas a Maxx market this year. We’re preparing for the all-digital conversion right now and we’ve already made TWC Maxx HFC speeds available to tens of thousands of Austin customers. Accelerating Maxx, will of course, require us to invest more capital and incur additional operating costs this year, but I’m thrilled that we’re in a position to pull this spending forward.”
In addition to faster data tiers, TWC Maxx will eventually lead to more VOD choices and enhanced DVR capabilities with the reclaimed bandwidth from all digital.
Marcus said that he still expected the $45.2 billion merger with Comcast to stay on track to close by the end of this year. He said his comments in an employee memo that went public were misconstrued in regards to the Federal Communications Commission having a lot on its merger plate with AT&T/DirecTV and other pending deals.
“I again want to commend our team for remaining laser focused on executing our operating plan while at the same time working to secure government approvals and planning for the integration with Comcast and Charter,” he said. “Since announcing the deal we’ve been steadfast in our commitment to running the business as if we were running it for the long haul. That’s no easy task given the many transaction distractions, but our team has really risen to the challenge and I couldn’t be prouder of their efforts.”
Time Warner Cable now has one-hour windows across its footprint for its technicians. Marcus said that last month Time Warner Cable techs arrived on time at 96.5 percent of those appointments. Also in June, trouble calls were 10 percent lower than a year ago “and we think there’s still more opportunity here,” according to Marcus.
Marcus said Time Warner Cable’s cloud-based guide was deployed to approximately 6 million boxes, which was about 40 percent of the company’s total base.
“The customer feedback has been terrific since we first began putting the new guide into customers’ homes, but we’re now seeing the first signs that the new UI is actually impacting the way customer engage with our video product,” Marcus said. “Customers with the guide are using VOD more than those with the legacy UI. That’s consistent with our hypothesis and very encouraging.”
“We’re also continuing to expand our Wi-Fi network and make it easier for customers to locate and sign on to hotspots. As a result, usage has skyrocketed. Unique Wi-Fi users and data consumption in June were more than triple of a year earlier and we continue to see a very strong correlation between usage and lower churn. Customer use of our industry leading IP video app is also expanding rapidly. The TWC TV App was used more than 9 million times in the month of June and that’s a 70 percent increase from a year earlier.”
By the numbers
Time Warner Cable lost 152,000 video subscribers in the second quarter, which exceeded some analysts’ projections of 128,000 on average, according to Bloomberg News. On the data side, Time Warner Cable added 67,000 new customers, which exceeded analysts’ projection of 62,000, but that trailed the 269,000 it gained in the last quarter. Residential voice additions totaled 79,000 for the quarter while triple play customers increased by 42,000.
“For the most part, the strength we saw year-over-year in subscriber performance this quarter was on the growth add side,” Marcus said. “We had strength across all of our sales channels and churn, or disconnect volume, was more or less flat in the quarter, which was actually, from our perspective , a positive story given that we did do our rate increase at the beginning of the quarter and we were still able to hold churn flat.”
Marcus also noted the success of Time Warner Cable’s business services division, which saw its revenue increase 22 percent to $691 million.
Time Warner Cable’s net income increased by 3.7 percent in its second quarter, but fell short of analysts' expectations.
Earnings increased to $499 million, or $1.76 per share, from $481 million, or $1.64 per share, in the same quarter a year earlier.
Earnings, adjusted for costs related to mergers and acquisitions, were $1.89 per share. The average per-share estimate of analysts surveyed by Zacks Investment Research was for profit of $1.93.
Time Warner Cable said revenue rose 3.2 percent to $5.73 billion from $5.55 billion in the same quarter a year earlier, and missed Wall Street forecasts. Analysts expected $5.74 billion, according to Zacks.
The Associated Press contributed to this story.