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CMCSA.OQ - Comcast Corp at Goldman Sachs Communacopia Conference (Virtual)

EVENT DATE/TIME: SEPTEMBER 22, 2021 / 12:00PM GMT

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SEPTEMBER 22, 2021 / 12:00PM, CMCSA.OQ - Comcast Corp at Goldman Sachs Communacopia Conference (Virtual)

C O R P O R A T E P A R T I C I P A N T S

Brian L. Roberts Comcast Corporation - Chairman & CEO

C O N F E R E N C E C A L L P A R T I C I P A N T S

John E. Waldron Goldman Sachs & Co. LLC - President & COO

P R E S E N T A T I O N

John E. Waldron - Goldman Sachs & Co. LLC - President & COO

Hello. I'm John Waldron. I'm the President and Chief Operating Officer of Goldman Sachs. It's my distinct pleasure this morning to have Brian Roberts from Comcast.

I don't think Brian needs much of an introduction. We have 40 minutes to talk about Comcast. So I'm going to get right into the discussion as many of you know Brian well and have seen Brian at this conference over the years many times.

We thank you, Brian, again, for coming to be with us this morning.

Brian L. Roberts - Comcast Corporation - Chairman & CEO

Great to see you, John, even if it's virtual. And this is always a highlight to what feels like the beginning of the new year right after the summer to come to Communacopia.

Q U E S T I O N S A N D A N S W E R S

John E. Waldron - Goldman Sachs & Co. LLC - President & COO

Great. So let's start kind of big picture as we get into the questions. Over the last several decades, Comcast has built and assembled a very unique set of connectivity and media assets. As highlighted by your second quarter results, most of your businesses are experiencing very strong tailwinds as we begin the second half of 2021.

Let me ask you about the key secular trends you see driving your growth from here. And why do you feel confident you have the right assets to remain a leader across your core markets?

Brian L. Roberts - Comcast Corporation - Chairman & CEO

Well, I'd start with I agree we had a terrific second quarter. And I really wouldn't want to trade places with too many people, if anyone. I think we've built an incredibly unique, different and special company. The last couple of years, I think, first of all, demonstrates we're in good businesses but also how scale matters. So if one business is going down for -- with some temporary hit from COVID, we had others that were surging. We have a great team of people, a culture that's been decades in the making, and I think we execute at a high level.

So that starts with what's the strategy. It's to build great products and services backed with new investment and innovation all the time to have the best-in-breed brand superiority and maintains our leadership. And all of that then builds value over the long term for shareholders. And if you look at our returns over long periods of time, I think that's the ultimate scorecard.

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SEPTEMBER 22, 2021 / 12:00PM, CMCSA.OQ - Comcast Corp at Goldman Sachs Communacopia Conference (Virtual)

So with that scale and team, we are now trying to develop once and deploy everywhere. So there's an announcement out today talking a little bit about that, and we'll get to that. And I think the company is doing extremely well, residential broadband, business services, mobile, the studios, parks, the U.K., Peacock, all of which have that wind -- tailwind that you talked about.

We have 60 million customers, relationships that connect to the best device in the home, and we can stream better and aggregate better than anyone else. So our entertainment and connectivity platforms give this large scale. We go to the best screen in the house to promote the next product and the next opportunity and new business models.

Your analyst you know well, Brett, says we'll do over $34 billion of EBITDA this year. If that happens, that would be our best in history. So yes, I really feel great about the company, the momentum, and I think we're set up for the future.

John E. Waldron - Goldman Sachs & Co. LLC - President & COO

That's great. So let's go through some of the businesses in some more detail. You mentioned broadband. Your broadband business has seen very strong growth, and you've outlined plans to accelerate the next phase of investment in your network. We are seeing your competitors step up their investments in fiber and 5G. So maybe you can talk about what Comcast is doing to maintain your current leadership position in broadband.

Brian L. Roberts - Comcast Corporation - Chairman & CEO

So we've been at this business for about 20 years. We've added basically at least 1 million customers a year in broadband, net, for all of each of those 20 years. And we now have about 33 million customers. So it's a fantastic and a well-sized business.

We have 31 million broadband -- I'm sorry, 33 million customers. So we're really a broadband company. That's the shift that happened over that 20 years. And we want to deepen the relationship.

So we've seen competition, we've had it throughout that 20-year period. Whether it's one form or one -- newer technologies, we're tuned up to deal with that. And I think our strategy is to take these 31 million relationships and deepen them, so whether that's WiFi connectivity, we have the best WiFi in home; whether we aggregate now your streaming video with voice navigation for free, where we give you mobile with Xfinity Mobile that saves you money, only to our broadband customers, by the way.

So we're building a company we believe is sustainable and growing residential and of course, in business services that is second-to-none products. So we need a road map because we can't control what competitors may do. And we're not getting any surprises in our mind from that competition. And what we want to do is continue to invest in the network. That's what's built the company. So we have a path, an economically and capital-efficient path to get to something we call DOCSIS 4.0, and it's going to exceed consumer demand.

And let me step back for 1 second on that question because I think it's so critical. If I think back 10 years or even 20 years and you break it into 10-year chunks, the Internet and what you did with your broadband 10 years ago is virtually unrecognizable today, what we're doing right now with streaming video or streaming television, business, e-commerce, education. And so 10 years from today, I believe broadband will be just as unrecognizable.

And if you had to place a bet, you'd probably say it will happen faster, not slower, than the pace of change the last 10 -- the 10 years before that. And so I think that positions our company as a leader in broadband in an enviable place. It plays to our strengths and I hope will help lead the way as we invest in our network and help develop these newer applications that are yet uninvented.

John E. Waldron - Goldman Sachs & Co. LLC - President & COO

Can I ask you, Brian, maybe to just go a little deeper and give us some examples of some of the things you've done to differentiate your products on a more granular level?

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SEPTEMBER 22, 2021 / 12:00PM, CMCSA.OQ - Comcast Corp at Goldman Sachs Communacopia Conference (Virtual)

Brian L. Roberts - Comcast Corporation - Chairman & CEO

So let's start with the device. So we have a gigabit gateway in your house. Today, we're actually announcing XiOne, which is a global box. So it works in Italy and works in the U.S., works in the U.K. We're going to have the same -- we may have slightly different form factors for the markets, but it will work on a television or it will just be a streaming-only device for WiFi. And that's part of this design it once, deploy it everywhere. It's the first box we've done that for in the world.

The second is these little xFi Pods. We give them to our best customers. They then give you a mesh network in your house. If you then -- and that gives you wall-to-wall WiFi. In the past 6 months, we have nearly 1 billion devices, 1 billion devices that are connected to our WiFi. Again, think back 10 years, that just doesn't even resemble. We didn't even have WiFi really.

And so we're thinking, well, what can you do with that WiFi? So one of the first features we came up with since not everybody is in our market, which we advertise and I think I have talked about at this conference, is that people can pause their WiFi. So family members can stay home for dinner, stop everything, they're playing games or get focused and do something else than just be on your device. We have -- 60 million times this year, people paused their WiFi. So it's resonating with customers, a new feature like that.

A feature we're working on is that you would get a text message to say, "Your Peloton is not getting the best reception. You might move your pod a little closer." And so we're using artificial intelligence based on our network management to proactively help customers get a better value and experience out of the products they're buying from us. People are setting their schedules of -- for the family using our xFi app. So we're pretty excited about that.

Flex is an example where if you just want broadband only, which a majority of our new sign-ups are, you get a free streaming box that now is this one world box, but it allows you to better, faster switch channels. One of the things is switching streaming services is what we used to do when we switch cable nets, and how long that load time is matters. Our engineers are hard at work to have the best, most seamless way to switch channels or switch streaming services.

All of this builds on our video history. So we're building a moat, John, around the most important part of the company. And we're innovating and we've shifted our whole technology focus to broadband in homes, and I think it's really paying off.

John E. Waldron - Goldman Sachs & Co. LLC - President & COO

That's great. Appreciate that detail. That's a lot of detail. That's helpful. Okay.

So let's talk about business services. So your business services segment is generating nearly $9 billion of annualized revenue and has now returned to pre-COVID levels of growth. How much more runway for growth do you see for Comcast across the business sector, especially the opportunity to further move upmarket into the enterprise segment?

Brian L. Roberts - Comcast Corporation - Chairman & CEO

Well, the great news is we see a lot of runway. And you're right, this business is one of those that came back even faster, and it goes to what's happening in the health of America, which you have an even better look at than I would per se. But it starts with small businesses and now medium-sized businesses all returning to work, whether it's restaurants or whether it's office buildings.

What we've been doing is that same answer on the last question: What are the product suites are we innovating and investing so we have something new to market? And we have -- the same personalized solutions that we're doing in homes, we're doing for businesses. And whether that's advanced WiFi, we're now offering 4G wireless backup. We have Comcast business mobile. We weren't offering mobile phones in our deal with Xfinity Mobile, and Verizon now does that. Network security is a huge element, cloud management.

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SEPTEMBER 22, 2021 / 12:00PM, CMCSA.OQ - Comcast Corp at Goldman Sachs Communacopia Conference (Virtual)

One thing that's really nice about Comcast business and our $9 billion revenue, it's the highest margin segment in the company. So it's not only growing at the pace before COVID but it's also the best dollars of growth. But we're able to now go upmarket.

So we made a tuck-in acquisition of a company that will help us do that, do it with international customers. We're working well with the other companies, phone and cable, so customers get one-stop shopping. And across all of our segments, if we add it up, we're about just under 20% market share of a $50 billion addressable market. So we see a lot of runway to grow, and it's clearly an important part of why I'm excited about our future.

John E. Waldron - Goldman Sachs & Co. LLC - President & COO

Okay. Good. So let's shift to wireless. You launched Xfinity Mobile in 2017. Comcast has added 3.4 million wireless lines, and the service is now generating positive EBITDA, I believe, as of the second quarter. However, the wireless market has seen significant change over the last year. You talked about change in broadband. There's been plenty of change in wireless as well: consolidation, new entrants and now the wide availability of 5G.

How do you view the long-term strategic opportunity here? Just talk a bit about the wireless market more broadly, strategically, in terms of how Comcast thinks about it.

Brian L. Roberts - Comcast Corporation - Chairman & CEO

Well, I'd start with the big picture. What's been great about our company over the long term is the products we sell really matter to people's lives. So if we go back to my dad's time, he got into television just as television really became so critical in our lives, and we've evolved with every iteration of television. Along comes personal computers, and broadband is in the sweet spot.

So wireless became the last mile, except the last foot. And the mobile device is the center of people's lives. So it's really strategically important that we have a fantastic mobile solution. And we've had a crossroads years ago, and we talked about that with a lot of investors and with our own management team and third parties, what's the best path. And we were very fortunate to come together with Verizon Wireless at the right time and make a deal that's pretty unusual in all of my business career.

It's perpetual in length, so it's a real partnership. It allows any new product so as that industry changes, you're right to point out, I think that plays to our benefit. Any innovation that comes to their network, our customers get same day. And so that gives us competitive parity and allows us then to do our own innovation and cost management and marketing off the back of their wonderful products.

So take 5G. We now include that for all of our customers at the same time everybody else has 5G. We have great relationship with the device manufacturers. So it's a really important part of saying to our customers do business with Xfinity and you have all of those products that matter, whether it's your in-home broadband or your personal device as well as the most -- maybe still the most important device for many of us anyway, your television.

So our other avenue that we've been exploring is we bought spectrum in 80% of our footprint. And that spectrum, we're working with Charter who has done something similar in their footprint. And we're looking in high-density areas whether -- through some trials that we're doing, to determine whether we could create even additional value with having an offload agreement. So the customer doesn't know the difference but it doesn't cost as much to rent as it does to build. And we can do that selectively in targeted ways, and that's something that we'll fill investors in as we go. But we're excited about at least the optionality of that, and it sets us up well for future possibilities.

We have, to answer your question then, 3.4 million phones out there -- or lines, with 2 million of our 33 million customers taking our mobile. So that looks like a lot of runway of growth with the #1, in the case of Xfinity Mobile, customer-rated experience. And that's because we have a great network integrated with products that you already have or in many cases, sign up to get.

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