Comcast Corporation (CMCSA) the largest cable MSO in the U.S. is introducing a new service for its voice customers which is expected to challenge large telecom carriers like Verizon Communication Inc’s (VZ) wireless data packages.
We believe that Comcast is introducing this service to offset the growing threats from both telecom and satellite service providers that are taking away its potential customers.
Comcast is launching this service under the name of “voice 2go” and would allow its customers to make free calls and send messages through their home based wireless network or through Wi-Fi hotspots. This service will help Comcast customers to save their monthly mobile minutes and will be launched soon in the cable operator’s service markets. We believe that this innovative service will force telecom carriers to adjust their fees for providing Wi-Fi services.
Recently, the company entered into an agreement with other cable companies like Time Warner Cable Inc. (TWC), Cablevision Systems Corp. (CVC), Cox Communications Inc. and Bright House Networks, LLC to share around 50000 Wi-Fi hotspots. This agreement will allow the subscribers to get Wi-Fi connectivity outside their service area. This move will complement the company’s new service offering as this will enable it to spread the new service to a wider area.
Additionally, we believe that cable MSOs are facing tough competition in the on-demand video market from satellite TV operators like DIRECTV Inc. (DTV) and DISH Network Corp. (DISH). Stiff competition from online video streaming providers is also acting as a negative catalyst for the company.
Comcast is looking at wireless data services to compensate the loss. The company wants to cash in on the roaming Wi-Fi opportunity which is expected to be a multi-billion dollar market in the next few years. As customers looks for better bundled offerings, this type of services will add value to Comcast’s customers.
Recommendation: We are maintaining our long-term Neutral recommendation on Comcast Corporation. Currently, Comcast Corporation has a Zacks #3 Rank, implying a short-term hold rating on the stock.Read the Full Research Report on CMCSA
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