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Should Charter Communications (CHTR) Enter Wireless Arena?
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Last week, the U.S. wireless industry dynamics took a turn after Comcast Corp. (CMCSA - Free Report) became the first cable MSO (multi service operator) to offer an unlimited data plan for the postpaid wireless market. This led to an industry wide speculation about the possibility of Charter Communications Inc. (CHTR - Free Report) following suit. Notably, with the acquisitions of Time Warner Cable and Bright House Networks, Charter Communications has become the second largest cable MSO after Comcast.
Comcast is likely to start offering wireless services around mid-2017 by combining its MVNO (mobile virtual private network) agreement with Verizon Communications Inc. (VZ - Free Report) with its own WiFi network. With this the company can offer quad-play wireless, wireline, video and high-speed data (Internet) services.
On the other hand, Verizon is already offering quad-play services using fiber-based FiOS video and FiOS Internet. AT&T Inc. (T - Free Report) has also become a major player in the bundled quad-play offerings after its acquisition of DIRECTV, the largest satellite TV operator.
The industry is wondering whether Charter Communications can survive providing just the triple-play video, voice and high-speed data services. We believe it will be tough for the cable MSO to remain competitive without entering the wireless field.
While unveiling its unlimited data plan for the wireless market, Comcast clearly stated that its plan is not specifically related to making huge profits or gaining significant market share from incumbent carriers. Rather, will aim retaining existing X1 pay-TV bundle subscribers by reducing churn rate. We believe the same logic also holds good for Charter Communications since cord-cutting has become an existential threat for traditional pay-TV operators.
In Feb 2017, Charter Communications announced the launch of its experimental field trials for the upcoming 5G wireless network. Notably, these trials come on the back of spectrum test licenses granted to the company by the Federal Communications Commission (FCC).
Like Comcast, Charter Communications also has an agreement with Verizon to operate as an MVNO using the latter’s wireless network. Charter Communications has more than 17 million video, 22.5 million high-speed Internet and 10.1 million voice customers.
In Jan 2017, The Wall Street Journal reported that Verizon is exploring strategic options to acquire Charter Communications. The latter’s announcement about its 5G trials immediately gave rise to these speculations. However, nothing concrete has come out so far.
We believe a merger with Charter Communications makes sense for Verizon since the company is aiming to launch the initial version of its super-fast 5G network in 2018. 5G services require connections to have fiber-optic networks in dense urban areas.
Charter Communications will aid Verizon to standardize its 5G network from a technical perspective. If the acquisition takes place, the combined entity will likely emerge as a significant player in the quad-play industry.
Price Performance of Charter Communications
Year to date the stock price of Charter Communications returned 14.84%, underperforming the Zacks categorized Cable TV industry’s gain of 15.06%. At present, the cable TV industry is facing a massive cord-cutting threat and Charter Communications is no exception. 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.
Want to learn more about Comcast's new Xfinity Mobile Plan? Listen to this week's episode of the Zacks Friday Finish Line:
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>
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Should Charter Communications (CHTR) Enter Wireless Arena?
Last week, the U.S. wireless industry dynamics took a turn after Comcast Corp. (CMCSA - Free Report) became the first cable MSO (multi service operator) to offer an unlimited data plan for the postpaid wireless market. This led to an industry wide speculation about the possibility of Charter Communications Inc. (CHTR - Free Report) following suit. Notably, with the acquisitions of Time Warner Cable and Bright House Networks, Charter Communications has become the second largest cable MSO after Comcast.
Comcast is likely to start offering wireless services around mid-2017 by combining its MVNO (mobile virtual private network) agreement with Verizon Communications Inc. (VZ - Free Report) with its own WiFi network. With this the company can offer quad-play wireless, wireline, video and high-speed data (Internet) services.
On the other hand, Verizon is already offering quad-play services using fiber-based FiOS video and FiOS Internet. AT&T Inc. (T - Free Report) has also become a major player in the bundled quad-play offerings after its acquisition of DIRECTV, the largest satellite TV operator.
The industry is wondering whether Charter Communications can survive providing just the triple-play video, voice and high-speed data services. We believe it will be tough for the cable MSO to remain competitive without entering the wireless field.
While unveiling its unlimited data plan for the wireless market, Comcast clearly stated that its plan is not specifically related to making huge profits or gaining significant market share from incumbent carriers. Rather, will aim retaining existing X1 pay-TV bundle subscribers by reducing churn rate. We believe the same logic also holds good for Charter Communications since cord-cutting has become an existential threat for traditional pay-TV operators.
In Feb 2017, Charter Communications announced the launch of its experimental field trials for the upcoming 5G wireless network. Notably, these trials come on the back of spectrum test licenses granted to the company by the Federal Communications Commission (FCC).
Like Comcast, Charter Communications also has an agreement with Verizon to operate as an MVNO using the latter’s wireless network. Charter Communications has more than 17 million video, 22.5 million high-speed Internet and 10.1 million voice customers.
In Jan 2017, The Wall Street Journal reported that Verizon is exploring strategic options to acquire Charter Communications. The latter’s announcement about its 5G trials immediately gave rise to these speculations. However, nothing concrete has come out so far.
We believe a merger with Charter Communications makes sense for Verizon since the company is aiming to launch the initial version of its super-fast 5G network in 2018. 5G services require connections to have fiber-optic networks in dense urban areas.
Charter Communications will aid Verizon to standardize its 5G network from a technical perspective. If the acquisition takes place, the combined entity will likely emerge as a significant player in the quad-play industry.
Price Performance of Charter Communications
Year to date the stock price of Charter Communications returned 14.84%, underperforming the Zacks categorized Cable TV industry’s gain of 15.06%. At present, the cable TV industry is facing a massive cord-cutting threat and Charter Communications is no exception. 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.
Want to learn more about Comcast's new Xfinity Mobile Plan? Listen to this week's episode of the Zacks Friday Finish Line:
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>