With Comcast committing only $1.7 billion in the recent FCC incentive auction, there has been some speculation among underwhelmed analysts that the company might be eyeing the purchase of a wireless carrier like T-Mobile US rather than building its own network.
Analyst Craig Moffett, however, proposed a different reality: Comcast, he said in a note to investors Thursday, might be having second thoughts about entering the wireless business.
“A simpler explanation is that Comcast stared into the abyss that is wireless these days… and decided they didn’t like what they saw. Not as a spectrum buyer, nor as a spectrum builder… and, most emphatically, not as a buyer of a whole company,” Moffett said. “The constant speculation about Comcast buying T-Mobile, or, no, wait… Sprint… Or, wait, I meant Verizon (all of it!) must be getting a bit tiresome in Philadelphia.”
Moffett wrote his note on the day Comcast reported first-quarter earnings, revealing more significant revenue upticks across cable and media business units. In the cable division, pay-TV users were up 42,000, broadband customers increased by 429,000 and revenue spiked 5.8% year over year. Overall, Comcast reported revenue growth of 8.9% for the quarter, with NBCUniversal enjoying a particularly strong start to 2017.
Meanwhile, Verizon shares slipped last week after the company posted a net loss of 289,000 postpaid phone customers during the first quarter.
“It can’t be lost on [Comcast CEO] Brian Roberts and company that the business they already have is an awful lot better than the business for which they are so frequently expected to trade their equity,” Moffett added.
On Thursday, hours after its earnings call, Comcast put out a statement recapping its broadcast incentive auction decisions.
“We are very pleased with the outcome of the FCC’s Broadcast Incentive Auction,” Comcast said. “In the reverse auction, NBC sold spectrum at attractive prices in New York (NBC - WNBC), Philadelphia (Telemundo - WWSI), and Chicago (Telemundo - WSNS) and will receive total proceeds of $481.6 million. Additionally, with the purchase of $1.7 billion of spectrum that covers 88% of our footprint and most of the footprint of each of our top 25 markets, Comcast made a strategically compelling investment at historically low prices. We have no current plans for the acquired spectrum and note that the spectrum will not be cleared by the FCC and available for use for several years. The launch and growth of our Xfinity Mobile product is not dependent on this purchased spectrum.”