Cable companies could be in danger of losing millions of their broadband customers as AT&T builds out its broadband fiber network.
In a new research note, Cowen analysts predicted AT&T could steal about 1 million customers from Comcast, 1 million from Charter, and 200,000 from Altice by 2023.
Those losses would result in a 3% annualized EBITDA loss ($1.1 billion) for Comcast, a 4% ($885 million) loss for Charter, and a 3% ($162 million loss) for Altice, according to the analysts.
AT&T’s initiative stems from its promise to the FCC as part of its 2015 acquisition of DirecTV to deploy fiber to millions of households. AT&T has deployed fiber to more than 3 million homes for the past two years. AT&T has indicated it might not stop at 14 million homes, its publicly stated goal. AT&T management has indicated it plans to ramp up its strategy to capture 50% of the market in three years, which suggests more aggressive share stealing to come, Cowen analysts wrote in the note.
Perhaps more importantly, AT&T could use its fiber build out to stem losses of DirecTV customers, the analysts said. If the company builds out in markets with a higher DirecTV penetration, it could offer a broadband bundle with the video service to retain or even win back customers it has lost.
But the Cowen analysts also said they believe cable companies will be able to manage the threat. Cable companies have been outperforming telcos in the broadband space for several quarters because they have a speed advantage.
Nearly all cable companies can provide 1 gigabit speeds, while telecom companies can only do so in about 25% of their footprint. AT&T’s upgrade to fiber will allow for 1 gig speeds.
But cable companies look to go further and have announced “10G” plans, which offer a path to speeds of 10 gigabit per second.
“Last year’s broadband subscriber growth (on top of a decade-plus of similar results) kind of shoots a big hole in their findings when it comes to us and customers,” a Comcast spokesman told Business Insider.
Charter did not immediately respond to a request for comment.