Comcast Unveils $45- to $65-Per-Month Wireless Service

Brian Roberts - Getty - H 2016
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Brian Roberts - Getty - H 2016

The cable giant, led by chairman and CEO Brian Roberts, will launch Xfinity Mobile midyear.

Cable giant Comcast Corp. on Thursday unveiled details of its upcoming wireless mobile service amid growing convergence and a battle between pay TV and phone companies for on-the-go consumers.

Midyear the company will launch the mobile offering packaged with TV and home internet services for between $45 and $65 per month for subscribers who are Comcast internet customers. The service will tap into Comcast Xfinity apps in allowing viewing of up to 200 live TV channels and 40,000 on-demand movies and shows.

"The simplicity of the offer lends itself to a digital-first experience at a very efficient cost-to-serve," Comcast CFO Mike Cavanagh told analysts.

He added that the service, dubbed Xfinity Mobile, was priced to be profitable for Comcast. "We've got a business that's got tremendous momentum — the core cable business. … We like the business we have; we're not looking to subsidize a new effort," said Cavanagh during an analyst presentation.

Comcast executives outlined their mobile plans to challenge phone giants like AT&T, which has agreed to acquire Time Warner for $85.4 billion, and Verizon as they roll out pay TV-style online services, such as DirecTV Now, launched late in 2016.

Comcast's wireless phone service will be offered via a resale agreement that the company had reached with telecom giant Verizon in 2012. It will be available to Comcast customers who already pay for internet service and potential new subscribers within the company’s footprint, which does not include such big markets as New York City and Los Angeles.

Cavanagh told analysts that Comcast would leverage its existing internet subscribers, its 16 million existing Wi-Fi hotspots and overall marketing efforts to drive interest in Xfinity Mobile. Comcast pointed to around 130 million mobile lines within its existing cable footprint to target with its mobile offering.

Xfinity Mobile subscribers will be able to automatically connect to Wi-Fi hotspots without having to log in each time. Comcast execs touted the new wireless service for making its customer base more sticky by reducing subscriber churn.

Over time, the wireless product could also help bring new customers to Comcast, they argued. The wireless offering will not be a stand-alone product. Instead, it will be sold as part of the company's broader bundle of services.

Macquarie Capital analyst Amy Yong in a recent research report on Comcast wrote: "The time for wireless is approaching where the focus will be on churn characteristics, cross-selling opportunities and wireless' profitability profile. Importantly, this could finally resolve their wireless strategy and placate fears of wireless substitution."

The report also noted that Comcast "recently noted its wireless launch and handset procurement will pressure margins and create an additional drag on working capital."