Cox Communications, the fourth largest cable operator in the US, reported Q1 revenue growth of 16%, operating income growth of 44% and operating cash flow growth of 22%. Revenue was $1.366 billion for the quarter. The company said service bundling was a key to improved performance thanks to a common network infrastructure and back-end billing systems. It also cited higher basic cable rates and a $5 price increase on high-speed Internet access adopted in certain markets. Highlights of the quarter include:
- Cox ended the quarter with 6.3 million basic video customers, up 0.6% from Q1 2002. The company has had net gains in basic subscribers in each of the past 3 quarters. Cox said there was no additional penetration of its market by satellite competitors despite their intense marketing campaigns.
Ended the quarter with 10.5 million total revenue generating units (RGUs), up 3% for the quarter, driven by an 8% growth in advanced-service RGUs for the quarter. Total RGUs and advanced-service RGUs were up 13% and 38%, respectively, compared to Q 2002.
Added 154,433 high-speed Internet customers, ending the quarter with 1.6 million high-speed Internet customers, representing year-over-year growth of 56%. Penetration in California is now 24%, despite heavy marketing of SBC's DSL service in the market. The company believes it is capturing 7 out of every 10 high speed Internet customers in the markets it serves. Cable modem service is available in 96% of the Cox footprint.
Added 64,126 Cox Digital Telephone customers, ending the quarter with 782,546 telephone customers, representing year-over-year growth of 52%. About 77% of its local phone subscribers also subscribe to Cox long distance service. The Cox network is currently handling 25 million local and long distance phone calls per day. Cox said it will continue to push its circuit-switched technology in the markets it serves, while continuing to evaluate VoIP for its expansion markets.
Achieved Cox Digital Cable net additions of 76,808 customers, ending the quarter with 1.9 million digital cable customers. Cox Digital Cable is now available in 97% of the homes in Cox's service areas with penetration of our basic customer base nearing 30%.
More than 40% of customers can now subscribe to HDTV services, providing a competitive differentiator to DBS providers.
Generated $355.9 million in cash flow from operating activities and $30.2 million in free cash flow (cash flows from operating activities less capital expenditures).
Reduced capital expenditures to $325.7 million for the quarter, down 37% from the first quarter of 2002.
Cox expects to add 1.0 million to 1.1 million advanced-service RGUs in 2003 driven by bundled offerings. Cox expects to achieve its previously stated 2003 financial guidance of revenue growth of 14% to 15%. CAPEX for 2003 is expected to be approximately $1.6 billion. In addition, Cox expects to be free cash flow positive for the full year 2003.
