Comcast Corp CMCSA) has acquired Contingent Network Services, a Cincinnati based technology deployment and managed services company, for an undisclosed amount. Earlier, Comcast had announced the creation of a new ‘Enterprise Service’ division with an aim to provide managed business services that include broadband, ethernet, voice, router, security, business continuity and Wi-Fi for Fortune 1000 companies. The acquisition will help Comcast to provide the necessary framework required for its new division. The firm will operate as a subsidiary of Comcast.
Gearing up for the Big Battle
Comcast is already an established player in the Small and Medium Business (SMB) segment. By foraying into the Large Business Segment, the company will face direct competition from established telecom players like Verizon (VZ - Free Report) and AT&T (T - Free Report) . Unsurprisingly, the company was in search for more firepower.
With the acquisition of Contingent, the company hopes to get enough ammunition to challenge the likes of Verizon and AT&T. Large companies require a provider to manage complex networks, develop business continuity plans and integrate cloud-based applications with business operations.
With the introduction of the new division, Comcast will try to provide necessary innovation and choice for these large customers. Contingent will assist the new unit to deploy technology at its client sites by taking advantage of Comcast’s extensive fiber and hybrid fiber-coax layout so as to deliver a seamless network experience to end users. The company has also entered into agreements with other cable operators to support the process.
Comcast stated that it has already won several large customers from multiple industries including financial services, hospitality and retail chains.
Cable industry players face significant threats from new age video streaming services like Hulu and Netflix (NFLX - Free Report) . Comcast is no exception. To maintain its financial position, the company is focusing on the business services division, which diversifies its business operations and creates a stable revenue stream. It is one of the fastest growing divisions of Comcast and clocked a growth rate of 21% last quarter. It remains to be seen whether its efforts to serve large businesses can create value in the long run.
Other stocks to Consider
Comcast Corp currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is CABLE ONE INC. (CABO - Free Report) which carries a Zacks Rank #1 (Buy).
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