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Cable Technology Feature Article

December 04, 2009

Higher Cable Operator Churn in 2010: Fitch Ratings

By Gary Kim, Contributing Editor

Cable TV operators will reportedly see higher customer churn in 2010, compared to 2009, according to Fitch Ratings. The basic subscriber erosion rate will accelerate in 2010 as competitive pressure remains fairly constant, but there will not be the lift from digital television conversion that benefited cable operators in the first and second quarter of 2009.
Cable operators experienced accelerating basic subscriber losses in 2009 as well, with a net loss of approximately 2.75 percent of their customers. Fitch estimates that basic subscriber erosion will increase to approximately 3.5 percent in 2010.
Subscriber losses are the result of weak new home growth, but more important, they are the result of competitive erosion from direct broadcast satellite and network-based incumbent local exchange carrier video offerings.
High-speed access subscriber additions also slowed materially for cable companies in 2009, and Fitch predicted subscriber growth of approximately 1.7 million new cable high-speed subscribers, nationwide, in 2010.
Fitch estimated that cable telephony net additions will fall to 1.4 million in 2010 as wireless substitution and weak housing-starts put pressure on the voice business.
In aggregate, Fitch predicted that cable revenues will increase in the three percent to five percent range in 2010, with a similar level of EBITDA growth.
Basically, Fitch Ratings analysts said competition in the business continues to grow and will have a material effect on both near-term and long-term growth.
The state of the economy also will be an issue, particularly related to unemployment and housing-starts. Fitch Ratings expects both of those issues will depress growth "well into 2010." Any U.S. economic improvement in 2010 will likely not be reflected in telecommunications and cable results until 2011, Fitch projected.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Amy Tierney