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Comcast Inks Deal with Sunrun, Boosts Residential Solar Suite

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Leading cable multi service operator and media giant Comcast Corp. (CMCSA - Free Report) has inked a 40-month deal with Sunrun Inc. (RUN - Free Report) on residential solar programs. Per the agreement, Sunrun will act as the exclusive residential solar energy provider for Comcast Cable (one of the primary businesses of Comcast). Comcast Cable will serve as one of Sunrun’s strategic partners through marketing campaigns in selected markets. Sunrun is the nation’s largest provider of residential solar, storage and energy services.

Comcast plans to begin marketing Sunrun’s rooftop solar services to its customers in selected states later this year.  This agreement follows a successful one-year solar pilot program in which participating Comcast subscribers will have the option of signing up for a Sunrun BrightSave plan. The BrightSave plan allows customers enjoy 20 years of solar energy at a fixed monthly rate.

As part of this agreement, Comcast will receive fees for new customers they bring to Sunrun. Comcast is also eligible to acquire as much as 9.99% of Sunrun’s stock if it can lock down 60,000 customers.

In their joint press release, Comcast and Sunrun pointed out that rooftop solar is projected to be one of the fastest growing sectors in the energy industry, nearly tripling in size in the United States by 2025 (from a 2017 Bloomberg New Energy Finance report).

Moreover, residential solar industry will continue to expand over the next decade as consumers are looking for cost-effective, independent and eco-friendly alternatives for energy resources. This will not only reduce expenses on electric bills but also reduce their dependence on fossil fuels.

With its Xfinity Home service (home automation and security business), Comcast currently has almost 1 million subscribers, who can easily manage, control and operate a number of key smart home functions, including energy consumption management. Hence, working with Sunrun on smart solar energy and storage solutions for consumers perfectly complements Comcast’s efforts to offer smart home services.

For fiscal 2017, Sunrun has nearly doubled its addressable market and is currently available in 22 states and the District of Columbia. This is allowing more consumers across the country to save on their electric bills.  

Bottom Line

Comcast has been expanding into new lines of business as growth in selling cable-TV subscriptions has slowed down due to cord cutting. Online video streaming providers such as Netflix, Hulu.com, YouTube etc., pose severe competitive threat to cable-TV operators because of their extremely cheap source of TV programming. In the last reported second-quarter 2017, Comcast lost 34,000 video customers and 22,000 voice customers and Charter Communications Inc. (CHTR - Free Report) lost 90,000 video customers.

In order to cope up with the loss and remain competitive in the market, cable companies like Comcast and Charter are jointly venturing into U.S. wireless services business, competing head to head with market incumbents like AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) . Comcast recently completed the nationwide rollout of its wireless services under the Xfinity Mobile brand, while Charter plans to offer wireless service in 2018.

Meanwhile, Comcast is trying to expand its business of selling home alarm systems and TV, phone and Internet for businesses.

Zacks Rank and Price Performance

Both Comcast and Sunrun currently sport a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In one month, shares of Comcast have rallied 2.01%, failing to beat the 3.77% growth of the industry it belongs to.

Over the same time span, share price of Sunrun soared 3.97%, outperforming the 3.18% loss of the industry it belongs to.

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