Comcast Corporation (CMCSA - Analyst Report) – the largest cable MSO in the U.S. has entered into an agreement with Olympusat Telecom, whereby the latter will be using Comcast’s Ethernet service. Olympusat Telecom is a subsidiary of Olympusat Holdings, Inc. and it offers complete video distribution solutions for media companies.
Olympusat Telecom generally operates in the United States and Latin America and offers various video broadcasting related services that includes satellite uplink, master control, video transport, digital production and content delivery networks and services.
Demand for HD related videos have increased lately, so delivering HD videos requires huge bandwidth. Moreover, the company’s growing client base, including popular companies like AT&T (T - Analyst Report), Directv and Time Warner Cable (TWC - Analyst Report) have forced Olympusat Telecom to use Comcast’s business class Ethernet service. This service will not only provide more bandwidth to Olympusat Telecom, but will also lend support to digital production services and back office operations.
Presently, Olympusat Telecom is using 500 Mbps ethernet connection from Comcast, which can be expanded to 2 Gbps when required.
Comcast business class Ethernet service targets small, medium and large enterprises and offers faster and secure network services to its clients. The company’s continuous loss of residential video subscribers is well mitigated by the increased penetration of the business class subscribers. So the company remains focused to expand its business class segment by offering huge array of services like Ethernet services, Voice over Internet Protocol (VoIp) service and internet service of 100 Mbps through Docsis 3.0 technology.
In the previous quarter, Comcast’s high speed Internet service business, which generally caters to business clients, generated more than $2.5 billion revenue and is showing strong signs of growth.
The company’s popular Xfinity service, which offers triple play service (voice, video and data), is gaining huge popularity. Thus, we believe that continuous launch of new value added services coupled with completion of deployment of Docsis 3.0 technology will attract more business clients going forward.
Currently, we are maintaining our long-term Neutral recommendation on Comcast. Comcast has a Zacks#2 Rank, implying a short-term Buy rating on the stock.