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Cable Technology Feature Article

October 31, 2013

Time Warner Cable Gains Business Accounts, Loses Consumers

By Gary Kim, Contributing Editor

Time Warner (News - Alert) Cable, facing subscriber losses, still managed to grow gross revenue and operating income in its third quarter of 2013. Growth also is lead by business customer accounts and high-speed Internet access, while voice and video revenues slipped.

Time Warner Cable revenue strategy will continue to shift, as a result. As other leading U.S. cable operators are doing, Time Warner Cable will look to business customer segments for revenue growth.

Though total Time Warner Cable revenue grew 2.9 percent year over year, business revenue grew 20.5 percent.

Business revenue was driven by increases in the number of high-speed data and voice subscribers and growth in mobile service provider tower backhaul and enterprise customer Metro Ethernet revenue.

Still, the consumer customer segment revenues outpace business revenues by nearly eight times. So, in the near term, Time Warner Cable will do better financially by stemming losses in its consumer services segment, compared to growth of revenues from its business segment.

Residential high-speed data revenue also grew by 14.2 percent, the clear bright spot in the consumer services segment.

Average monthly revenue per residential customer relationship grew 1.9 percent to $105.06, driven by growth in ARPU per new customer relationship.

The growth in residential high-speed data revenue was the result of an increase in average revenue per subscriber, primarily due to an increase in equipment rental charges and a greater percentage of subscribers purchasing higher-priced tiers of service, as well as year-over-year growth in the number of high-speed data subscribers, Time Warner Cable said.

Residential video revenue decreased, because of a loss of video subscribers and premium network revenue ($15 million of subscriber credits issued in connection with a temporary blackout of Showtime resulting from a dispute with CBS).

Residential voice revenue decreased due to a decline in average revenue per subscriber and fewer voice subscribers. Time Warner Cable lost a net 306,000 video accounts, 24,000 high speed access accounts and 128,000 voice accounts in the quarter.

In the business customer segment, Time Warner Cable gained 2,000 video accounts, 15,000 high speed data accounts and 12,000 voice accounts.

Overall, the company faces prospects, challenges and opportunities similar to other cable operators, namely a reliance on high speed access in the consumer segment, with a need to harvest video and voice revenues while growing new revenues from business customers and home security services.

Edited by Alisen Downey

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