Charter Communications Inc. CHTR has followed in the footsteps of Comcast Corporation CMCSA, announcing that it will foray into the wireless telecom service space. Charter Communications will utilize the Mobile Virtual Network Operator (MVNO) agreement that Time Warner Cable had inked with Verizon Communications Inc. VZ in 2012. Notably, Charter acquired Time Warner Cable this year to form the second-largest cable multi service operator (MSO) in the U.S. after Comcast.
Like Comcast, Charter Communications will provide its wireless network services under the MVNO deal with Verizon. It involves utilizing Verizon’s wireless network to provide mobile phone service in lieu of a lease payment. Additionally, Charter Communications will try installing several Wi-Fi hotspots across cities to expand its network.
Pay-TV companies, which also include cable MSOs, have been facing severe competitive threat from video streaming service providers like Netflix Inc. NFLX. This has resulted in cord cutting and high customer churn rate. In a bid to minimize customer loss, cable MSOs are considering alternatives like integrating with over-the-top (OTT) service providers. Entering into the wireless services market is another viable option to ensure steady top-line growth at these companies. Moreover, these cable giants have the required fiber infrastructure as well as the financial and technological resources to expand their wireless footprint in the future.
The Bottom Line
Entry of cable MSOs into the wireless space will intensify competition among the incumbent players in the industry. This is expected to drive innovation in products and services viz. integrated voice, video and data bundles. Moreover, this move signals that Charter Communications is leaving no stones unturned to go after Comcast in the battle among the cable giants.
Charter Communications currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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