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Will Comcast Offer iPhone for Upcoming Wireless Venture?

Zacks Equity Research

According to a recent FierceWireless news report, leading cable multi service operator and media giant Comcast Corp. CMCSA is reportedly forming a partnership with Apple Inc. AAPL to sell the latest version of iPhone along with the service provider’s upcoming wireless venture. Comcast’s wireless service will be launched under the “Xfinity Mobile” brand.

Notably, in Oct 2015, Comcast had inked a deal with U.S. telecom behemoth Verizon Communications Inc. VZ to become an MVNO (mobile virtual network operator) and offer wireless services. The company is likely to initiate its wireless offerings in the middle of 2017. In Dec 2015, at the Business Insider Ignition conference, CEO Brian L. Roberts went on to reveal that the company is contemplating whether the decision to sell smartphones along with wireless services will be a feasible one.

Comcast’s wireless service is likely to be a hybrid product relying primarily on its WiFi hotspots, as it uses Verizon’s cellular network as a back-up to fill-in for areas that lack adequate WiFi coverage. At present, the company boasts an extensive public WiFi network consisting of nearly 16 million hotspots.

Brian Roberts also stated the possibility of the MVNO agreement being extended in the near future with Sprint Corp. S and other wireless operators. Importantly, Comcast took part in the recently concluded 600 MHz low-band wireless spectrum auction conducted by the Federal Communications Commission.

The U.S. wireless market is currently witnessing cut-throat pricing competition. At present, approximately 68% of this market is controlled by Verizon and AT&T Inc. T. However, T-Mobile US Inc. TMUS and Sprint are desperately trying to expand their foothold therein by offering lower-priced plans. In this scenario, the entry of non-wireless giants like Comcast will further intensify wireless competition.  

Price Performance of Comcast

Year-to-date the stock price of Comcast returned 7.69%, underperforming the Zacks categorized Cable TV industry’s gain of 9.68%. At present, cable TV industry is facing a massive cord-cutting threat and Comcast is no exception to the trend. We believe that is the primary reason behind the stock currently carrying 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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AT&T Inc. (T): Free Stock Analysis Report
 
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