Comcast to Jump Into Airwaves Auction
February 03 2016 - 3:50PM
Dow Jones News
Comcast Corp. said Wednesday it plans to enter the government's
upcoming spectrum auction, showing the cable giant may be serious
about another push into the increasingly competitive wireless
industry.
While Comcast executives didn't give details on their plans,
analysts said the company could spend several billions of dollars
to buy up airwaves being made available for wireless services. The
company would be bidding against traditional players like AT&T
Inc. and Verizon Communications Inc.
The airwaves are being auctioned off later this year by the
Federal Communications Commission, which is repurposing spectrum it
once set aside for television broadcasts. The FCC is offering to
pay TV stations to go off the air or move their broadcast to free
up the airwaves it plans to resell to the highest bidders.
"We are going to evaluate, consider and may purchase, but only
if we consider the price is right," Comcast's Chief Financial
Officer Michael Cavanagh said on a conference call to discuss the
company's earnings results.
Comcast, whose NBCUniversal owns 28 local NBC and Telemundo
stations, according to its website, has said it would sell some of
its TV licenses in the FCC auction, something that could help pay
for the wireless bids.
New Street Research analyst Jonathan Chaplin estimated Comcast
could spend $3 billion to $5 billion in the auction, net of what it
gets for selling some stations, which he assumes will be $1 billion
to $2 billion.
Comcast has taken other steps to explore adding cellular
services to its broadband and television offerings. Last year,
Comcast informed Verizon it would execute a 2011 agreement that
allows Comcast to resell Verizon's wireless service, but it has yet
to offer any such service. It already has a vast Wi-Fi footprint of
more than 13.3 million hot spots that could anchor a mobile
offering.
MoffettNathanson analyst Craig Moffett suggested that one reason
Comcast shares have languished recently—down 13% over the past
three months despite its stronger operating performance—is investor
cautiousness about elevated capital spending with an entry into
wireless. He said a frequent question from investors is whether
such spending could disrupt Comcast's share buybacks and
dividends.
Comcast said Wednesday it won't be reducing its $5 billion in
buybacks if it acquires spectrum in the auction. Comcast shares
were up 3.8% in afternoon trading.
The entrance of Comcast also shifts the dynamics of the auction.
In the last major FCC auction, which ended in January 2015, total
bidding was almost $45 billion in part because another pay TV
operator Dish Network Corp. was aggressive in buying up licenses.
Dish has yet to detail its plans for its vast airwaves
holdings.
The cable industry has flirted with offering wireless service
before. A group of cable companies—including Comcast, Time Warner
Cable and Bright House Networks—bought spectrum in a 2006 auction
but agreed to sell it to Verizon five years later. A group of major
cable companies also offered wireless service through Sprint Corp.
in a venture called Pivot but that ended in 2008.
But the evolution of the wireless business—the majority of
traffic growth is coming from video—may make it more attractive for
Comcast amid investor concerns about cord-cutting.
"Our definition of broadband is totally different today than it
was five years ago for what you get as a consumer," Comcast CEO
Brian Roberts said Wednesday. "I think that goes back into whether
we can do something creative in the future, whether that's
involving spectrum or Wi-Fi or some of the existing relationships
we've got."
Write to Thomas Gryta at thomas.gryta@wsj.com and Shalini
Ramachandran at shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
February 03, 2016 15:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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