Comcast, Charter join for wireless ops
Cable giants will work together to challenge telecoms.
Comcast and Charter have agreed to cooperate on upcoming cellphone services as both cable companies face growing threats from national wireless carriers such as AT&T and Verizon.
The cable companies said that while they’ll offer wireless services separately to customers, they will work together on behind-thescenes matters like customer billing and device-ordering systems. They said the agreement will save money and help them compete with the national providers.
As part of the deal, announced Monday, Comcast and Charter agreed that they wouldn’t buy other wireless companies for one year, or make related deals without consulting each other first. It also includes restrictions on any transaction that would give another company a majority ownership or voting power in either Comcast or Charter.
The deal comes amid speculation of impending consolidation in the wireless industry and has the effect of letting both companies develop wireless services to compete with existing wireless carriers without having to worry about also competing with each other.
For the most part, Comcast and Charter aren’t direct competitors, as their service territories don’t overlap. The bigger threat comes from the likes of Verizon and AT&T, which are able to offer TV, internet and home phone services, along with wireless.
To compete, Philadelphia-based Comcast expects to launch its own wireless plan, Xfinity Mobile, in the next several weeks. Charter, based in Stamford, Conn., expects to introduce its unnamed service next year. Both wireless services will lease Verizon’s network.
To reduce costs, Comcast and Charter will need to try to encourage customers to use Wi-Fi hotspots rather than cellular whenever possible. By working together, the two companies can explore way to let customers use each other’s hotspots when they travel.
Analysts at MoffettNathanson said in a research note that the Verizon lease lets each company market wireless service only in its cable service territory. But if either Comcast or Charter were to buy a wireless carrier, such as T-Mobile or Sprint, it would suddenly be able to sell service nationwide, including in the other cable company’s region.
The deal won’t prohibit the companies from making a joint bid for a wireless carrier.
“Neither company wants a future where they are adjacent in wireline but overlapping and competing in wireless,” the research note said. “Either company acquiring T-Mobile or Sprint would have been an untenable situation.”
A turn higher in the last few minutes of trading was enough to nudge U.S. indexes to more record highs Monday as fear seemed to drain out of the market.
Trading was calm following the weekend’s presidential election in France, which had the potential to upset global markets. The candidate who was in favor of keeping France in the European Union and in the euro currency won, to the relief of investors who feared the alternative would have hurt global trade. That helped calm markets enough that an index used to measure the market’s fear level dropped to its lowest level since 1993.
The Standard & Poor’s 500 index wafted up and down through the day before ending at 2,399.38, up by just 0.09 points. The Dow Jones industrial average likewise edged up a fraction of a percent, adding 5.34 points to 21,012.28.
The Nasdaq composite rose 1.90 points, or less than 0.1 percent, to 6,102.66. Small-company stocks fell, and the Russell 2000 index lost 5.36, or 0.4 percent, to 1,391.64.
Markets around the world have been tearing higher in recent weeks, due in part to excitement about the French election and strong earnings reports from U.S. companies.
“Corporate earnings have been phenomenal, the best quarter in five years,” said Phil Orlando, chief equity strategist at Federated Investors. “The earnings recession that was about seven or eight quarters long is definitively behind us. It’s over.”
More than 80 percent of companies in the S&P 500 have reported their results for the first three months of the year, and most have topped analysts’ expectations. With the U.S. job market continuing to improve, along with economies around the world, Orlando says he expects profits to keep rising through the year. That has him, unlike market critics, not worried that stocks have grown too expensive relative to their profits, and he expects further gains.
“Everyone is starting to get a little more confident now,” he said.
Confidence has grown enough that the VIX volatility index Monday sank to its lowest level since 1993. The VIX measures how much investors are paying to protect themselves from upcoming swings in the S&P 500.
Newell Brands jumped to the largest gain in the S&P 500 on Monday after reporting stronger revenue and profit for its latest quarter than analysts expected. The company, whose brands include Paper Mate, Sharpie and Calphalon, also raised its earnings forecast for the year. Shares jumped $5.54, or 11.9 percent, to $51.93.
Kate Spade surged $1.41, or 8.3 percent, to $18.38 after agreeing to a $2.4 billion buyout by Coach, its rival in the luxury goods market. Coach will pay $18.50 per share for Kate Spade.
In the commodities market, benchmark U.S. crude rose 21 cents to settle at $46.43 per barrel. Brent crude, the international standard, rose 24 cents to settle at $49.34 a barrel. Natural gas fell 9 cents to $3.17 per 1,000 cubic feet.
Gold rose 20 cents to settle at $1,227.10 per ounce, silver fell 2 cents to $16.26 per ounce and copper fell 4 cents to $2.49 per pound.
Bond yields edged higher. The yield on the 10-year Treasury rose to 2.39 percent from 2.35 percent. The twoyear yield ticked up to 1.32 percent from 1.31 percent, and the 30-year Treasury yield rose to 3.03 percent.