Charter’s (CHTR - Free Report) Spectrum Mobile service is now fully available for new and existing Spectrum Internet subscribers across its footprint. Notably, the company did a soft launch on Jun 30, this year.
Spectrum Mobile is primarily supported by Verizon’s (VZ - Free Report) Wireless 4G-LTE network under a Mobile Virtual Network Operator (MVNO) agreement. The service only uses Spectrum Wi-Fi hotspots for voice and data, if it gets a strong signal. The mobile service is available for $45 per month for unlimited data or $14 per Gigabit, shared across all lines.
Charter’s Spectrum Mobile launch follows another cable company Comcast’s (CMCSA - Free Report) Xfinity Mobile service launch in early 2017. Notably, both of them use Verizon’s network.
Moreover, in April 2018, Comcast and Charter announced a 50-50 joint venture that is focused on the development and design of backend systems that support Xfinity and Spectrum Mobile services.
Spectrum Mobile to Boost Charter’s Growth
Cable MVNOs like Charter and Comcast are likely to add almost 2.2 million mobile phone customers in 2020, or almost 50% of the industry’s total net customer addition, according to Morgan Stanley research. The cable MVNOs are expected to gain market share from the likes of T-mobile (TMUS - Free Report) in the long haul.
Notably, Comcast’s Xfinity Mobile service added 204,000 subscriber lines in second-quarter 2018, with total lines reaching 781,000, almost double of 380,000 lines at the end of 2017.
We expect Charter’s Spectrum Mobile to gain robust traction, primarily due its expanded footprint post the acquisitions of Time Warner Cable (TWC) and Bright House Networks. Moreover, aggressive promotional activities are expected to drive subscriber growth for Spectrum Mobile service.
To generate buzz about the service, Charter is offering flexibility to change plans at no extra cost and interest-free monthly installment plans for most popular mobile devices.
Further, Charter’s all-digital initiative is expected to drive growth. At the end of the second quarter, 91% of Charter's footprint was all digital. The company continued with its all-digital efforts in almost 6% of legacy TWC's footprint and 50% of legacy Bright House's presence.
All-digital initiative allows Charter to offer more advanced products and services, and provides residential customers with two-way digital set-top boxes, which offer better video picture quality, an interactive programming guide and video on demand on all TV outlets in residences.
Expanding Internet Service to Drive Growth
Moreover, Charter expanded the availability of its Spectrum Internet Gig service (940 Mbps) to a number of new markets in the last quarter. The service, which uses DOCSIS 3.1 technology, now covers approximately 60% of the company’s footprint.
Charter expects to launch its Spectrum Internet Gig service to nearly its entire footprint by the end of 2018. Additionally, the company is doubling minimum Internet speeds to 200 Mbps in a number of markets at no additional cost to new and existing Spectrum Internet customers.
Currently, Charter has 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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