Less than five years after first launching the latest iteration of cable wireless service, the major operators have finally got it right, according to influential media analyst Craig Moffett.
Moffett, principal and senior analyst at MoffettNathanson, makes his case In a 44-page report issued Thursday, adding that he believes that annual revenue at Comcast Xfinity Mobile, which launched in 2017, could reach $5.1 billion in sales (more than twice the $2.3 billion expected in 2021) by 2025. Moffett also expects Xfinity Mobile to have 7.9 million subscribers by 2025, nearly double the 3.9 million customers estimated for this year.
Moffett expects Charter Communications, which launched its Spectrum Mobile service in 2018 and shares an MVNO agreement with Comcast, to also aggressively price its wireless service. As a result, he estimated that Spectrum Mobile revenue will double from $2.1 billion in 2021 to $4.2 billion by 2025 and that subscribers will double from 3.5 million to 7.2 million in the same time frame.
“Cable wireless is now ready for its star turn,” Moffett wrote, adding that the product “offers the potential for significant value creation for the MSOs and their investors.”
That’s a far cry from 20 years ago, when cable first ventured into the wireless business with Sprint, the first of three failed attempts at a wireless product with that company. Now Sprint is no more -- it was purchased by T-Mobile in 2020 in a $26 billion deal -- and Comcast and Charter smartened up, reaching a mobile virtual network operator deal with Verizon in 2015 that has paid off in spades.
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According to Moffett, in the four years since Xfinity Mobile launched, cable wireless has grown to 6 million subscribers, becoming the fastest growing segment in the industry and accounting for about 30% of new additions. The cable wireless segment, he added, represents about 2% of the total U.S. mobile phone market.
Because cable operators are regional players -- they only market service in their respective service territories, their wireless success is even more impressive. Moffett estimated that assuming each home has 2.5 people, Comcast and Charter have reached 4% penetration among their existing customers.
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Comcast said in Q1 that Xfinity Mobile reached break-even, a milestone that was helped by the restructuring of its MVNO agreement with Verizon last year. With the mobile service no longer losing money and a new, more economical MVNO deal in hand, Moffett said that encouraged Comcast to aggressively price its unlimited wireless data plans.
“With more aggressive family plan pricing, they have a much longer runway,” Moffett wrote of Comcast’s wireless business. “And while their new pricing will mean a step backwards in near term profitability, their ability to offload traffic in the future means that they can eventually achieve at least adequate margins on what is now likely to be a much larger revenue base than we had anticipated.”
