Comcast, Charter Join to Take on AT&T, Verizon in Wireless

(Bloomberg) -- Comcast Corp. and Charter Communications Inc., the two largest U.S. cable operators, agreed to work together in the wireless business to compete nationwide with giants like AT&T Inc. and Verizon Communications Inc.

Collaboration will allow the companies to speed their entry into mobile, according to a statement Monday. Comcast and Charter already have deals that let them re-sell wireless service using Verizon’s network in their respective territories. The two also agreed that if they want to strike a deal with a wireless provider other than Verizon or buy a wireless company in the next year, they’ll do so together.

Comcast and Charter executives said the partnership would allow them to become nationwide competitors in the wireless business, potentially offering lower prices as they gain negotiating leverage with Verizon or another wireless operator. The accord also could lead to more innovative products, since engineers at both companies will work together.

Shares of Comcast, Verizon and AT&T were little changed in New York trading. Charter fell 3.6 percent to $322.91.

5G Future

Both Comcast, the largest U.S. cable operator, and Charter, No. 2, are seeking new sources of revenue as demand for cable-TV services declines. They also face the long-term threat from wireless companies like AT&T that are building the fifth generation of wireless services, known as 5G, that could offer TV service along with blazing-fast internet speeds on consumers’ phones.

Last month, Philadelphia-based Comcast unveiled a wireless phone service employs its 16 million Wi-Fi hotspots and Verizon’s cellular network as a backup. The company plans to introduce the service to its customers by early June.

Charter, based in Stamford, Connecticut, has said it plans to introduce a wireless service sometime next year, but the collaboration with Comcast could allow it to move faster.

Collaboration History

Cable companies have a history of working together. Comcast and Charter are members of Cable Labs, a nonprofit that researches new technologies for the industry. The two companies serve separate regional territories. Comcast has about 29 million customers in cities including Philadelphia, Boston and Chicago. Charter, which bought Time Warner Cable last year, has about 26 million subscribers in markets like New York and Los Angeles.

Analysts expect a wave of deals in the wireless industry under a potentially more lenient Trump administration, with a quiet period surrounding a U.S. airwaves auction having lifted last month.

Last November, Charter’s largest shareholder, billionaire John Malone, suggested that cable companies should team up in the wireless business.

“Obviously, the larger the scale of the footprint, the greater the synergies,” Malone said at an investor day for his Liberty Media Corp. “The greater the coverage, the more efficient the brand, the greater the negotiating leverage with whoever the network operator is.”

He said the idea of cable operators teaming up to acquire a wireless company “is a possibility.”

To contact the reporter on this story: Gerry Smith in New York at gsmith233@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum