Cable wireless service, initially believed to be a retention tool for broadband, is quickly becoming a revenue and profit center in its own right. Some analysts see it as an important part of the overall cable revenue mix, especially as traffic from telco partners is unloaded onto the network.

Since launching their respective wireless offerings in 2017 and 2018, both Comcast and Charter Communications have amassed a collective 7.6 million wireless customers, and growth rates keep rising. In Q4, both Comcast and Charter reported their best quarterly subscriber growth ever. As expansion continues into more rural areas through edge-outs, fiber extensions and federal programs, that pace isn’t expected to slow anytime soon. This should come as good news for investors, who have seen the companies’ respective stock prices slip amid fears of slowing broadband growth.

In a research report, MoffettNathanson senior analyst Craig Moffett wrote that wireless is quickly becoming a profitable business for cable operators and before long the business will be a meaningful profit center. 

According to Charter, the mobile business had negative earnings before interest, taxes, depreciation and amortization (EBITDA) of $92 million in Q4. For the year, EBITDA was negative $311 million. The deficits are getting better, though — EBITDA was negative $401 million in 2020 and negative $520 million in 2019. According to Moffett, Charter could reach EBITDA break-even this year. 

That would be on a profitability path akin to its mobile virtual network operator (MVNO) partner and the largest cable operator in the country, Comcast, which already has reported four straight quarters of positive wireless EBITDA growth.

Moffett doesn’t expect wireless to replace broadband in investors’ hearts: high-speed internet remains a better business. But he does believe that investors have to stop thinking of cable as “only” a broadband provider.

A Second Stream

“Cable isn’t a broadband-only business,” Moffett wrote. “It is, as we have repeated so often over the past two decades, an infrastructure business with multiple revenue streams — residential and commercial, wired and, yes, wireless — riding on that infrastructure.”

All this is happening as the Big Three wireless companies — AT&T, Verizon Communications and T-Mobile — aggressively price their offerings to drive subscriber growth. Cable, which has avoided pricing wars in the past, has been equally aggressive, with $30 per month, per line promotions from both Comcast and Charter (for a minimum of four lines and two lines, respectively) plus device discounts. 

But as cable is looking toward growth, AT&T and Verizon are anticipating a slowdown in what has been a strong past two years. AT&T said in January that it expects wireless revenue to grow about 3% in 2022, down from 5% last year. Wireless EBITDA is expected to be in the low single digits in 2022, compared to 3.2% in 2021. 

For Verizon, the forecast is for postpaid phone additions to slow to 1.585 million in 2022 (down 25% from 2021 additions of 2.115 million) and 1.46 million in 2023, according to Evercore ISI Group media and telecom analyst Vijay Jayant.

“While the company continues to execute well, pressure from 5G leader T-Mobile, combined with increasingly aggressive cable wireless pricing, keep us on the sidelines,” Jayant wrote.

T-Mobile postpaid phone net additions will be down about 6% in 2022 at 2.75 million, Jayant estimated, rising by 4% to 2.85 million in 2023.  

While Comcast and Charter have experienced explosive growth on the wireless front, one major publicly traded operator, Altice USA, has had worse luck with mobile. But that could change soon.

Altice USA added just 5,000 wireless customers in Q4, and ended the year with about 186,000 mobile subscribers.

Altice introduced its wireless product — now branded Optimum Mobile — in 2019 at a very low price point ($20 per month) and it has lagged well behind its peers in terms of subscriber growth, revenue and profitability. After several attempts to right the ship, which stumbled in part because of its original mobile virtual network operator (MVNO) agreement with Sprint (now T-Mobile), Altice says it is back on track with wireless. 

On a February 16 conference call with analysts to discuss Q4 results, Altice USA CEO Dexter Goei said churn rates have leveled off to the 30% range from previous highs of 60% to 70% and are declining monthly. And the company is close to forging a new MVNO agreement with T-Mobile, which should also help the service. 

“I think we’ve been clear that wireless is very important to our strategy,” Goei said.

Altice is currently concentrating on building out its fiber network: It expects to pass about 6.5 million homes, or 60% of its footprint, with its fiber-to-the-home platform by 2025. Though broadband expansion is inherently a catalyst for mobile growth — mobile customers need to subscribe to broadband in order to get wireless service — the fiber buildout could mean Altice continues to lag behind its peers for the foreseeable future. 

In a February 18 research note, Moffett reversed his outlook on Altice, downgrading the stock to “neutral” and slashing his 12-month price target on shares by more than half to $15 from $33. The primary reason for the downgrade was Moffett’s belief that Altice’s broadband turnaround is going to take at least three years. He predicted Altice would add just 9,000 subscribers in 2022 and 34,000 in 2023 and wouldn’t approach 2019 levels until 2025.  

While Altice moves to turn around its broadband business, other cable operators are focusing on expanding the service into more rural areas. 

Rural Opportunities 

At Comcast, which has about 4 million mobile customers and nearly 32 million broadband subscribers, rural expansion is ongoing. During its fourth-quarter earnings call with analysts, Comcast Cable CEO Dave Watson said mobile and broadband growth go hand in hand.

“Our mobile is key for us, and in and of itself is a great growth opportunity, but it’s also very important to broadband,” Watson said. “We talked a lot about broadband churn benefits. That continues, but we want to bring mobile value to every segment in every offer.”

As Comcast builds out more homes to broadband, there are more opportunities to sell mobile service. “The way we look at it, every single broadband home is an opportunity,” Watson said. “And every single broadband home should have at least a couple of lines.”

Charter was one of the big winners in the federal Rural Digital Opportunity Fund (RDOF) auction, snagging about $1.2 billion in funding to help bring broadband to underserved and unserved markets. That funding will be part of the $5 billion commitment the company has made to bring broadband service to more than 1 million customer locations in unserved areas of the country over the next five years. Charter has already earmarked some early markets for the expansion. In the past two months it has launched service to nearly 3,000 unserved homes and businesses in areas of rural Kentucky, South Carolina, Michigan, Missouri and Texas. And more are to come. 

Broadband expansion can only help mobile growth as customers need high-speed data service to be mobile customers. At least for now, as the pandemic has caused more and more consumers to stay put and stick with existing providers, much of Charter’s mobile growth is coming from existing broadband customers upgrading to mobile service and existing mobile customers adding lines. 

Offloading Key to Growth

Charter chairman and CEO Tom Rutledge said the MSO is also making inroads at offloading mobile traffic from the MVNO to its own WiFi network, making the operation more cost-efficient. Charter also has a large block of CBRS spectrum which Rutledge said could be used to transfer as much as 30% of its mobile traffic. 

“We also are already offloading enormous amounts of traffic on WiFi,” Rutledge said. “And I think that we have the ability to take that up significantly, too.”

That could be key. According to Moffett, the biggest goal for both Comcast and Charter in cable wireless is to offload as much traffic as they can onto their own networks to become both a mobile network operator (MNO) and an MVNO.  

“A hybrid MNO/MVNO combines the best of all outcomes,” Moffett wrote. “They will be facilities-based where the returns are high and an MVNO in the places where the returns on building would be low. Margins will likely grow over time, but the real appeal of the strategy isn’t EBITDA margin but instead return on invested capital.” ■

April 1 will be no joke for the telecom industry. That’s the day T-Mobile-Sprint is scheduled to complete a two-year odyssey to get its $26 billion merger across the finish line, creating a more competitive and deeper-pocketed No. 3 wireless carrier. But just as the New T-Mobile, as the combined company is tentatively called, bulks up to an estimated 100 million wireless customers, other players are beginning to emerge.

Dish Network is poised to become the fourth-largest U.S. wireless carrier, based on the asset it has agreed to buy from T-Mobile-Sprint as a condition of federal regulatory approval of the latter’s merger. Shortly after T-Mobile-Sprint closes its deal, Dish will buy 9.3 million former Boost Mobile and Virgin Mobile prepaid wireless subscribers. Dish will also gain access to the new T-Mobile network via a seven-year mobile virtual network operator (MVNO) deal, and will spend another $3.4 billion to purchase spectrum from the new entity over three years.

On the sidelines sits cable, which after three failed attempts to break into the wireless business over the past two decades seems to have found the right elements within the past two years. Comcast’s Xfinity Mobile, launched in 2017, crossed 2.05 million subscribers in 2019 and, according to some analysts, is on a path to more than double that base in the next four years. Typically conservative Comcast said it expects wireless to become cash-flow positive by the end of 2021.

Charter Communications, which launched Spectrum Mobile in September 2018, added more than 1 million customers in the past 18 months and expects to be cash-flow positive in 2021.

Those new and stronger players will all have to compete with wireless industry behemoths AT&T (166 million wireless subscribers) and Verizon Communications (120 million wireless customers). Here’s a closer look at how they are expected to stack up.

New T-Mobile

T-Mobile proposed its merger with Sprint in April 2018, a deal it said would allow it to better compete with AT&T and Verizon and introduce new products and services to underserved markets. Along the way, the companies had to clear hurdles set up by a group of state attorneys general, which claimed the merger would result in higher prices for consumers. T-Mobile-Sprint was cleared for takeoff in February, after a federal judge ruled the combination was in the public interest. While other states have said they won’t appeal, including New York state, California Attorney General Xavier Becerra has said he would keep his options open. Most observers believe T-Mobile-Sprint can go through with the closing no matter what Becerra decides.

Just what the new T-Mobile will do after the close is anyone’s guess. But the company has made at least one thing clear: It’s going after cable.

“We’ve said it all along: the New T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition,” T-Mobile CEO John Legere said in a press release shortly after the federal court decision was announced. “The broad and deep 5G network that only our combined companies will be able to bring to life is going to change wireless … and beyond. Look out Dumb and Dumber [AT&T and Verizon] and Big Cable — we are coming for you … and you haven’t seen anything yet!”

Whatever T-Mobile does in the video space will likely involve its 2018 purchase of Layer3 TV. T-Mobile spent about $325 million for over-the-top multichannel video programming distributor (MVPD) Layer3 TV and launched TVision Home in eight markets in April of 2019. Layer3 has high programming costs (20% to 30% higher than its peers, T-Mobile has said in federal filings) which has made launching the video service difficult.

Legere has said he will step down as CEO in May, after the deal closes, replaced by T-Mobile chief operating officer Mike Sievert. With the merger behind it, Sievert said the new T-Mobile will be able to focus on providing stronger service and expanding its 5G footprint.

T-Mobile-Sprint has pledged to spend about $40 billion over three years on 5G deployment and to expand its rural wireless service to reach 59.4 million homes. It has also promised to deploy a new in-home broadband option to more than 52% of U.S. ZIP codes, with a plan to obtain 9.5 million U.S. households by 2024, with 20% of those homes in underserved areas. The new T-Mobile also expects to build 600 additional retail outlets.

Dish Network

Dish has agreed to purchase T-Mobile-Sprint’s prepaid wireless businesses (Boost Mobile and Virgin Mobile) for $1.4 billion, adding about 9.3 million subscribers shortly after the larger merger closes. Dish will also spend another $3.6 billion on T-Mobile-owned 800 MHz wireless spectrum over the next three years, and will have its own MVNO agreement with the combined company for seven years.

Dish has been relatively quiet about its plans for the wireless service — it needs to build a 5G-capable network available to 20% of the country by 2022, expanding to 70% of the U.S. by June 2023, as per federal mandate. In the past, Dish has spoken of using its wireless capability to accelerate the Internet of Things, but lately the focus has been more on 5G, especially the ability to bring that technology to rural America. Dish has said it expects to spend about $10 billion to build out the 5G network, a figure some analysts have said is too low.

The biggest short-term benefit of the deal for Dish is that it gives it more time to build out its wireless network with its existing spectrum. It had been facing a March 2020 deadline for its network to reach 20% of the country. Now, it has two more years to reach that milestone. The addition of the Boost Mobile and Virgin Mobile subscribers also provides a pool of potential customers for its postpaid business. While prepaid customers churn at a 5% rate, Dish has said migrating those customers over to a more reliable Dish-operated network — both via the T-Mobile MVNO and whatever it builds out — should reduce that churn substantially.

On Dish’s Q4 earnings conference call, founder and chairman Charlie Ergen was reluctant to reveal too much of the company’s wireless strategy, but said the build for 5G service will be on a city-by-city basis.

“There’s obviously going to be some cities that are more interested in getting 5G quickly,” Ergen said. “And those cities that want to work with us will probably get first priority. And then, obviously, when we build out a city, we can have owner economics there. So we don’t have to build — we’re probably not going to build two towers in every city. We’ll build that city by city, and complete a city before we move to the next city.”

Xfinity Mobile

Comcast launched Xfinity Mobile in 2017. Two years later, the mobile service has 2.05 million customers and is evolving from its initial purpose as a retention tool for broadband to becoming a profit center. Comcast chief financial officer Michael Cavanagh has said wireless is expected to be profitable by 2021.

The success of the wireless product can be traced to one tenet: Keep it simple, Comcast senior VP of innovation and customer value proposition Rui Costa said.

“The starting point has always been our connectivity business,” Costa said. “The success attributed to wireless is how well we position it as an additional benefit of our connectivity value proposition. The way we’ve introduced this, as the missing piece of our broadband, has been paramount to the success of this.”

The way Comcast has introduced wireless this time around also is different, Costa said, in that the focus is on the overall customer experience.

“Our product is the experience and the experience is our product,” he said, adding that Comcast has purposefully kept the mobile product as simple as possible, whether it be flexible pricing plans, different data options and even a pay-as-you-go option. The idea is to offer consumers choice without bombarding them with options that are difficult to understand.

Wireless has also proven to be an incentive for customers to keep their broadband service. Like its cable peer Charter Communications, Comcast wireless customers are required to subscribe to broadband.

In 2019, Comcast Cable added 1.4 million broadband customers, its best performance in 12 years. While there are other factors associated with that growth, including the speedy demise of telco digital subscriber line service, at least some of it can be traced to wireless stickiness.

Costa didn’t want to take credit for the rise of broadband, saying there are a lot of factors that could be attributed to its success. But wireless is becoming an increasingly important component of the overall connectivity value proposition, he said.

“The success has been the proof of how well we’re telling the story to consumers and how valuable that has become to them,” Costa said.

Those subscriber increases have helped substantially reduce the mobile unit’s EBITDA, or cash flow, losses. Comcast cut its wireless EBITDA losses by nearly half in 2019, to $402 million from $746 million in the prior year. In Q4 alone, the unit’s EBITDA losses improved by 40%, prompting Cavanagh to predict wireless would be cash-flow positive for the full year of 2021.

Analysts see strong growth ahead for the wireless product: Moffett has estimated that Xfinity Mobile will more than double its subscribers to 5.7 million by 2024.

“The strategy has been, and is and will be, how can we use mobile as a benefit back to our broadband and connectivity business?” Costa said. “It is working because we see a benefit translated in many ways — churn, and attachment of other products. The other is the halo that has been created on the back of this new way of doing business with us.”

Spectrum Mobile

Charter launched Spectrum Mobile in September 2018 and in a little more than a year grew its wireless customer base from virtually nothing to 1.1 million. According to chief mobile officer Danny Bowman, Charter’s recipe for wireless success can be summed up in two words: simplicity and speed.

“We’ve integrated mobile into our core business,” Bowman said. “We introduce mobile into every possible transaction, whether that’s inbound sales or someone walking into our stores. The channels themselves have built a lot of mobile muscle memory and it’s just become part of what we do.”

Charter was also expected on March 6 to launch 5G in 14 cities via its Verizon MVNO. (Comcast also has said it would begin offering 5G handsets on March 6.) Speeds of the service will range from 700 Megabits per second to 1 Gigabit per second. According to Bowman, 5G will be included at no extra charge to Spectrum Mobile’s $45 per month unlimited data customers.

“We already provide the fastest mobile experience from coast to coast,” Bowman said. “This is just another proof point that we’re always going to have the fastest mobile experience for our customers. We’re keeping it super simple. We’re not creating some high premium rate plan that you have to buy. I think it’ll be easy for our channels to sell. You pick a 5G device, you get a $45 rate plan; you pick a 4G device, you get a $45 rate plan.”

Also helping with sales of the 5G product, as well Charter’s other offerings, are the more than 350 Spectrum retail stores with mobile service across the country. More are planned, Bowman said, adding the stores have played a key role in mobile’s success.

The stores are just another choice on a long list of options customers have for buying mobile service, including online, or by making a phone call and having a device or a SIM card shipped to their home.

“We’ve made it really easy for a customer to do business with us,” Bowman said. “Whether you want to say, call, click or visit, we’ve made it very simple and we can be very disruptive because of how we support our customers and what channel they want to use.”

Altice Mobile

Altice USA, the newest cable player on the wireless block, launched its mobile service in September 2019 and finished the year with about 69,000 customers, an initial pace the company claimed was twice that of its peers. The smallest of the three cable players, Altice — with about 4.2 million broadband customers, compared to 28.6 million for Comcast and 25 million for Charter — also has the most aggressive offering. Altice Mobile launched at a price point of $20 per line for life, less than half the $45 per line Comcast and Charter were charging. Altice Mobile has since said it ended that $20 promotion in March, increasing the price to $30 per line for new customers (legacy customers will still pay $20 for as long as they have the service). Still, even at the higher price point, Altice Mobile is cable’s best wireless bargain.

Altice’s ability to keep its prices so low is tied in part to its MVNO deal with Sprint (now T-Mobile). Altice USA CEO Dexter Goei has said its original MVNO deal will remain intact after the merger.

Analysts have pointed to Altice USA’s MVNO as the gold standard for such deals among cable operators. Based on the structure of that agreement, Altice pays less as more and more traffic moves off the MVNO to Altice’s network. Given the architecture of the Altice network, that won’t be as hard as it seems.

Under Altice’s deal, Sprint is allowed to build small cells on Altice’s network. Sprint pays nothing to Altice aside from construction costs. In turn, the cable company gets to ride on those small cells for free. The more cells there are, the lower the cost of the MVNO.

After the T-Mobile-Sprint close, Altice will have access to what Moffett called “a best-in-class network at a disruptively low price. It seems a foregone conclusion that they will attract subscribers. They already believe they can offload enough traffic from the network that they will be profitable even at super-low prices.”

Altice USA added about 69,000 mobile customers in Q4 — about twice the quarterly pace of its peers’ initial offerings — and is expected to end 2024 with 876,000 customers, according to MoffettNathanson, or about 17% of its total broadband base, inline with its larger peers.

At the Morgan Stanley Technology, Media and Telecom conference on March 3, Goei said Altice counts about 100,000 wireless customers, a signup pace about 2.5 times faster than its peers at launch.

Altice USA also will have access to 5G tech through its T-Mobile-Sprint MVNO, Goei added. While 5G could be perceived as a threat to Altice’s own wireless business, Goei said he views it more as an opportunity, especially since the technology is expected to be deployed over time.

“There’s obviously different strategies amongst different operators, but by and large, it’s an opportunity for MVPDs to work with wireless operators, particularly those who want a small cell,” Goei said. “And for those who want to go deep into the residential neighborhoods with fiber, good luck, have fun.”

Suburban New Yorkers will once again be able to buy a cellphone plan from their cable operator.

Altice USA — which put Cablevision Systems’ WiFi-only mobile play, Freewheel, out to pasture when it bought the Bethpage, N.Y.-based cable company shortly after its 2015 launch — is on track to deploy its own consumer wireless service this summer.

According to The Wall Street Journal, which said it spoke to unnamed company sources, the service will likely be called Altice Mobile and will be bargain priced somewhere between $20 to $30 a month.

That price undercuts roughly by half the base mobile plan for Sprint, from which Altice leases 4G LTE network resources via a mobile virtual network operator (MVNO) agreement signed in 2017.

It’s unclear at this point if that price applies to an unlimited plan or a “by-the-Gig” data scheme that is used by Comcast and Charter Communications in their respective already launched MVNO-based mobile services. Comcast, for example, offers customers the opportunity to structure their mobile plan in $12-per-Gigabyte increments. (That, of course, is a bargain for minimalist users who consume very little data on the mobile network.) Altice USA did not respond to a request for comment by press time.

Also unclear: Can Altice make money on bundling mobile plans using another company’s network?

Not a Cash Cow

So far, it doesn’t appear that mobile has generated a ton of revenue for either Comcast or Charter, both of which have MVNO agreements with Verizon Communications, and also collaborate on technology and business plans for their services.

Comcast said Xfinity Mobile, which launched back in early 2017, generated $225 million in revenue in the first quarter, up from $185 million in Q1 2018. Comcast ended the January-March period with 1.4 million Xfinity Mobile customer lines, up from 577,000 the Q1 prior.

Charter, which launched Spectrum Mobile last year, said it now has 310,000 wireless lines in the market, after adding 176,000 in the first quarter.

Charter hasn’t disclosed revenue figures for its nascent mobile service, but chief financial officer Christopher Winfrey did say during the operator’s Q1 call that “mobile is ramping nicely and the early results of this product launch remain promising.”

This growth is occurring in a saturated U.S. wireless market, where the big incumbents, Verizon, AT&T, T-Mobile and Sprint are engaged in an aggressive promotional war for customer growth.

Analysts, however, don’t seem impressed by the market infiltration for either Xfinity Mobile or Spectrum Mobile.

“It should be clear by this point that the current [MVNO] deal is a money-loser for the cable operators; it’s not profitable and it likely never will be,” MoffettNathanson principal and senior analyst Craig Moffett wrote in a recent report.

Moffett’s issues stem from the cost of the MVNO agreement, which were supposed to be offset by the offloading of mobile data traffic to the respective Comcast and Charter WiFi networks. With both cable companies pricing their respective unlimited plans at $45 per line, the analyst estimates that a customer using 8 Gigabytes a month generates around $40 in network leasing costs.

“Throw in, say, another $5 per month for voice, and unlimited customers are already underwater even before customer service, customer acquisition costs and [selling, general and administrative expenses],” Moffett said.

As for the WiFi offloading plan, he added, “Cable’s out-of-home WiFi network is a bust; the industry stopped expanding it years ago after it became clear that it was never going to provide a robust out-of-home user experience.”

For their part, both Comcast and Charter have touted the value of their mobile services as churn busters — yet another reason for customers to be tied to the wireline internet and TV bundle. “Churn reduction arguments are nice,” Moffett said, “but they’re really just tiebreakers.”

So into this market comes Altice USA, with 3.3 million video customers and 4.1 million internet customers. It has what it believes to be an edge: owner’s economics on the Sprint network. Partial owner’s economics, anyway.

Under the agreement signed with Sprint, Sprint can build as many small cells as it wants on Altice’s network to, among other reasons, expand its 5G wherewithal. Sprint doesn’t have to pay any lease or backhaul fees, only for the hardware and construction costs. Altice, meanwhile, incurs no costs when it uses those small cells to support its mobile service.

Speaking recently about what he calls an “infrastructure-based MVNO,” Altice USA CEO Dexter Goei said Sprint has already deployed around 19,000 small cells on its network.

“We have relatively attractive wholesale economics compared to other MVNOs,” Goei noted on Altice’s May 2 first-quarter earnings call. “Our core network infrastructure is ready to go, giving us full access control over the customer experience and allows us to better manage traffic.”

Small Cells Save on Costs

Indeed, the more small cells that are added, the more Altice’s MVNO costs will come down over time. Further, T-Mobile has already agreed not to disrupt the deal if and when it closes on its $26 billion bid to acquire Sprint.

“It’s a rather elegant solution,” Moffett said. “Sprint gets a huge cost and time-to-market advantage versus Verizon, AT&T, and — if the [merger] deal is rejected — T-Mobile. And Altice USA gets an MVNO agreement which gets cheaper and cheaper over time as more and more traffic is carried by their joint small cells.”

Goei added, “We’re doing a similar MVNO price point to other MVNOs out there, and it’s going to be profitable right out of the box.”

Cable’s entry into the wireless business has become a little more complicated now that top operators Comcast and Charter Communications plan to “explore potential opportunities for operational cooperation,” and Altice USA has said it would entertain reseller relationships with carriers.

Comcast and Charter each already have a Mobile Virtual Network Operator (MVNO) agreement with Verizon that essentially allows them to resell service over Verizon’s network under their respective brand names. Altice USA, a unit of European telecom company Altice N.V., has affirmed it would be open to a similar deal.

The Comcast-Charter partnership comes as a bit of a surprise because both companies seem to be at different stages of their wireless product development.

Comcast unveiled its wireless offering — Xfinity Mobile — in April, a product more geared toward pricing and data consumption flexibility. With Xfinity Mobile, consumers could buy unlimited data plans or subscribe on a pay-as-you-go basis.

Charter, which inherited its Verizon MVNO after the MSO purchased Time Warner Cable, doesn’t expect to launch a product until 2018 and has offered few details about its plans. In the past, though, chairman and CEO Tom Rutledge has hinted that Charter’s wireless product could be geared more toward 5G technology.

ADDING STICKINESS TO THE BUNDLE
Cable’s mobile play seems to be geared more toward customer retention than an effort to be the fifth competitor in a five-player market. Coupled with broadband and WiFi, a competitive wireless product could make existing cable customers even stickier.

Analysts initially seemed more concerned about what the Comcast- Charter partnership prevented — each side said it would not make a major wireless acquisition for one year without the other’s approval — than what it allowed.

Most saw that provision as squashing speculation that Comcast or Charter would buy a wireless company, such as Sprint, T-Mobile or even Verizon.

Related > Report: Sprint, T-Mobile Start Informal Merger Talks

One analyst, Kannan Venkateshwar of Barclays, noted that Charter’s largest shareholder, cable deal maven John Malone, once said cable companies should jointly purchase a wireless provider.

While that could point Charter and Comcast toward a joint wireless purchase, Venkateshwar said such a deal is probably unlikely. More possible, he added, is that wireless players, and even Dish Network, look more closely at deals.

“Overall, the risk at present is that despite speculation over the last few months around M&A, there is a risk that the process becomes a staring contest with no one choosing to move first,” Venkateshwar wrote in a research note. “We believe the degree of urgency is likely to be felt most by those feeling the greatest degree of competitive pressure — i.e., Sprint and Verizon. With cable seemingly out of the wireless M&A landscape for now, T-Mobile and Dish could become the focus of M&A conversations.”

Just what the partnership will bring to both companies’ offerings is unclear. Comcast and Charter talked about efficiencies in buying equipment, using the same billing systems and creating common operating platforms. But it would be pretty remarkable if Comcast, which started beta-testing Xfinity Mobile with employees in April and is expected to fully launch the product throughout its footprint next month, didn’t already have those things in place.

Comcast is a member of the Cable WiFi roaming consortium, a group that included Cox Communications, Time Warner Cable, Cablevision and Bright House Networks when it was created in 2012. Customers of the companies within Cable WiFi can access the WiFi networks of member companies when they travel outside of their respective footprints. Charter joined the group after it purchased TWC and Bright House last May.

Overall, analysts were encouraged by the Comcast- Charter pact, if only as proof that the cable companies, which have stumbled with wireless partnerships in the past, were serious this time.

MoffettNathanson principal and senior analyst Craig Moffett blogged that “it would have been crazy for the two companies not to pursue the wireless business together” and said a key part of the deal is the ability to hand off cellular calls from the Verizon MVNO network to the WiFi networks of both cable companies.

“The economies that come with offloading traffic onto owned-and-operated facilities, particularly in their respective WiFi footprints, are the critical basis of sharing, but operationalizing that requires integration of technology plans, network design, etc.,” Moffett wrote. “As part of the agreement, each will ensure that their respective economics are optimized. This is precisely the agreement we always expected.”

GOEI: ALTICE IS ‘VERY MUCH IN LINE’
Altice USA, which in April filed preliminary documents with the Securities and Exchange Commission for an initial public offering, has said in the past that it would be open to an MVNO agreement with a wireless provider. CEO Dexter Goei reiterated that stance last week.

Altice has other priorities, though, mainly in integrating its most recent purchases: Cablevision Systems last June and Suddenlink Communications in December 2015.

On a call with reporters Goei said he admired the Comcast-Charter partnership but Altice is taking its time.

“We said on our last earnings call that we would have discussions around MVNO,” Goei said. “Longer term, are we interested in more fixed infrastructure? I think it’s unclear. We are very much in line with our cable brethren here in terms of taking our time to evaluate what our options are on wireless.”