Comcast, Time Warner might team for wireless
EmptyBig cable operators are taking a close look at a possible wireless play, with Comcast and Time Warner Cable in talks to fund a new wireless venture that would be operated by telecom giant Sprint Nextel and broadband provider Clearwire.
The wireless network would be based on WiMax technology and could power broadband access on such devices as laptops and cell phones and enable high-quality mobile video.
The news comes after satellite TV giant Dish Network won $712 million in wireless spectrum around the country in a recent FCC auction. Satellite peer DirecTV Group has not specified any wireless plans so far.
Wall Street observers said wireless services would give cable operators a leg up in their heated competition with telecom and satellite players, but they also have feared that this would require a lot of capital, which would be a drag on cable companies' free cash flow.
Comcast, the largest U.S. cable firm, could invest as much as $1 billion in the new venture, with TWC looking at contributing $500 million, and small Bright House Networks putting up $100 million-$200 million, the Wall Street Journal reported. Google also could invest in the network, it said.
A source confirmed the talks, but representatives for the companies declined comment or couldn't be reached.
"The market is likely to view a deal as roughly neutral-to-slightly negative for Comcast and Time Warner Cable -- a negative from the perspective of near-term free cash flow, but a positive in removing a potentially much larger overhang," Bernstein Research analyst Craig Moffett said. "The news is a negative for DirecTV."
Analysts also argue that the investment in a joint venture would be cheaper for cable firms than building their own wireless networks from scratch or acquiring a wireless provider, which has been rumored in the past.