Comcast Jumps Into Wireless With $45 Service Undercutting Rivals

Comcast Corp. unveiled a wireless service that offers unlimited data on Verizon Communications Inc.’s network for less than nearly every other competitor and said the venture will be profitable once it reaches hundreds of thousands of subscribers.

While the pricing plans have some strings attached and are available only to Comcast’s internet and TV customers, the initial $45 unlimited offer is the lowest among the top U.S. wireless carriers and is likely to further escalate a price war that has ravaged the industry. Shares of the cable giant rose the most in more than two months.

Comcast, the largest U.S. cable operator, is seeking new sources of revenue as consumers ditch traditional TV packages and competitors like AT&T Inc. and Charter Communications Inc. get bigger through acquisitions. The Philadelphia-based company is using the new service, called Xfinity Mobile, to sell other products and entice its 29 million subscribers to stick around as more options become available to watch shows and movies online.

“The more products you add, the lower the churn,” said Greg Butz, president of Comcast Mobile, using the industry term for monthly subscriber defections.

Comcast says it expects to have 250 stores, about half of its total, retooled to sell wireless service and phones by the end of the year. The remaining stores will be updated in the following years, the company said.

The company has weighed entering the wireless business for several years. Even though mobile carriers are slugging it out today with profit-shrinking unlimited offers, Comcast’s new service wasn’t timed to any particular moment, executives said Thursday. The business will reach profitability once subscribers reach a “low-to-mid-single-digit” share of the 25 million broadband customers it has, Comcast Chief Financial Officer Mike Cavanagh said.

Comcast’s shares rose 2.2 percent to $38.15 at 1:51 p.m. in New York -- the biggest single-day jump since Jan 26. The stock is up 10 percent for the year. AT&T fell 1.5 percent and Verizon lost 1 percent after the Comcast announcement.

Comcast’s current high-speed internet customers can get the unlimited mobile voice and data plan for $65 a month. It costs $45 a month for those who already subscribe to Comcast’s premiere “double” or “triple” play packages, which include video and landline phone services. That’s a steep discount to the cheapest plans offered by Verizon and AT&T, the nation’s No. 1 and No. 2 wireless carriers.

 

Source: Bloomberg.com