Comcast Business ramps up its larger business presence, but small business challenges remain

“While we're experiencing an elevated level of competition in SMB, we continue to generate healthy revenue growth by driving higher adoption of our suite of advanced services, which deepens the relationship with our large base of customers,” he said. “Our Enterprise segment is an even more substantial contributor to growth, and one in which we are just scratching the surface.”

Raising enterprise presence

Comcast Business continues to see upside in serving larger enterprise business customers.

Mike Cavanaugh, president of Comcast, said in the Enterprise Solutions segment that it is “capitalizing on the significant opportunity to increase our market share and grow customer relationships. We've consistently grown sales and revenue in this segment in high single digits.”

On average, Comcast’s large enterprise customers are buying over seven products.

Cavanaugh said that while connectivity is a key element of the business segment growth, advanced services revenues are continuing to rise.

“Connectivity is always going to be the core driver of our business,” he said. “However, three years ago, for every $1 of connectivity we sold in the enterprise segment, we sold $0.20 of advanced solutions. Today, for every $1 of connectivity services, we sell approximately $0.50 of advanced services, further solidifying our right to win in the market and providing more value to customers.”

Enhancing managed services

Managed services continue to be a focus for Comcast Business’s growth plans.

Comcast is enhancing its business segment growth through organic service expansions in managed services, Ethernet, network buildouts, and targeted acquisitions.

In February, the service provider announced it would expand its dedicated Internet access (DIA) solution to 1 million new business locations, threatening incumbent Ethernet providers like AT&T and Lumen, which have long enjoyed dominant positions in the business services market. 

The expanded DIA service is all about being where its customers are. It will deliver symmetrical speeds with service level agreements (SLAs) over fiber or its existing HFC cable network.

Within the managed services space, Comcast continues to enhance its SD-WAN play. For the first time, Comcast reached the number one ranking on Vertical Systems Group’s 2024 U.S. SD-WAN LEADERBOARD, showing ongoing shifts in the segment.

According to VSG, the company has steadily risen in the SD-WAN market segment from its eighth position in 2018.

Comcast’s growth in the SD-WAN reflects the service provider’s ongoing commitment to expanding its business service capabilities via aggressive network builds into businesses.

Comcast also has enhanced its business play with new acquisitions, including Masergy in 2021 and Nitel, which it completed earlier this month.

“Nitel is a great tuck-in acquisition that strengthens our ability to deliver advanced, reliable connectivity solutions, enhancing Comcast Business's competitiveness in the managed services space,” Armstrong said. “Nitel's network aggregation capabilities and network-as-a-service offerings broaden our ability to service our customers, and their indirect channel distribution strategy magnifies our mid-market and enterprise presence.”

However, the impact of the Nitel acquisition, which will enhance its network-as-a-service (NaaS) capabilities, will be truly felt only in the second quarter.

“Nitel's network aggregation capabilities and network-as-a-service offerings broaden our ability to service our customers, and their indirect channel distribution strategy magnifies our mid-market and enterprise presence,” Armstrong said. “Our results in the second quarter will include Nitel, which we expect will add a few hundred basis points of revenue growth to business services with a minimal impact on EBITDA growth in the near term.”

Small business pressures

While Comcast Business continues to take market share in the larger business market, it faces competitive challenges in the small to medium business (SMB) market.

A big threat is coming from fixed Wireless operators like AT&T, T-Mobile, and Verizon, which continue to target SMBs with their services.

Verizon saw its biggest quarter to date in FWA customer additions with businesses, 151,000, setting a new high for the telco.

David Watson, CEO of Connectivity & Platforms for Comcast, said it is seeing aggressive moves by the largest wireless operators for mobile substitution with small businesses.

“There's pressure in terms of relationships,” he said. “But our strategy is broad-based regarding revenue generation in every relationship and even small businesses. We're adding a lot of products and services to those relationships, and we're encouraged by that.”

He added that Comcast Business is making up for challenges with SMBs by emphasizing the pursuit of new, larger business customers.

“Our focus has continued to shift, having done a nice job on small business to mid and enterprise customers, and that's where we're getting just a lot of traction as we provide complete answers for our customers in those segments as we do connectivity to advanced services and adding a new part of the company Nitel,” Watson said. “We're very excited about that, but the pressure is in small businesses.”

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