No Rush for Cable to Add Wireless Service, Investors Say
Cable operators face no competitive pressures to resell wireless services in the short term, despite rekindled speculation of a deal with Sprint Nextel, said investors who spoke with us. With wireless rates having slumped the past 5 years, there are few opportunities to make money through a mobile virtual network operator (MVNO) agreement, said investors and analysts. Comcast, Cox and Time Warner have said they formed a consortium to consider selling wireless services (CD July 28 p11).
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Speculation a deal was imminent was fueled by a Multichannel News report early Mon. that those 3 firms were near signing an MVNO accord with Sprint Nextel. But cable operators have said they're in no hurry to reach an agreement and are banking on newer services including VoIP for growth. “We do not believe we need a wireless phone [service] to be successful,” said Comcast CEO Brian Roberts at an investor conference last month (CD Sept 22 p11). “We're not that anxious.” Comcast and Cox declined to comment Mon. on whether they're near a wireless pact; a Time Warner official wasn’t available right away.
“It’s just not that important. You can’t make that much money selling wireless,” said Mark Asset Management Pres. Morris Mark. “There are plenty of wireless stores around for people to buy wireless. I'm not aware of Cingular or Verizon Wireless selling other stuff in the stores,” he said, referring to the triple-play package of digital TV, broadband and phone service offered by cable firms. “I would be hard-pressed not to share that view,” said Marshall Front, chmn. of Front-Barnett Assoc. His firm owned about $30 million worth of Time Warner stock June 30.
Analysts we spoke with said they agreed with investor views - at least for now. “I don’t traditionally think of my cable operator as my cellphone operator,” said Richard Greenfield, analyst at Fulcrum Global Partners. “It may become more important. The jury is still out, it would seem like, as more and more consumers are dropping land lines and having only wireless phones.” Sanford Bernstein analyst Craig Moffett wrote that wireless is “a ‘nice to have’ rather than a ‘must have’ element of the consumer bundle.” He added, in a research note, that “the relatively limited commitment implied by an MVNO deal is, in our view, appropriate… There are few, if any, opportunities for cost savings associated with the joint provision of cable and wireless services.” Still, that’s not stopping wireless firms from seeking a pact. “It’s certainly not unusual for us to have ongoing discussions with these partners on this topic,” said a spokesman for Sprint Nextel, adding that he had no specific comment. - Jonathan Make