Analysts at MoffettNathanson warned AT&T and Verizon will likely bear the brunt of the damage as cable MVNOs continue to gain ground in the U.S. wireless market.
Way back in 2018, former T-Mobile CEO John Legere dismissed Comcast and Charter Communications’ MVNO plays as “irrelevant.” But that narrative has changed as the cable companies have steadily gained ground, with MoffettNathanson declaring in a research note last month “it is time for cable and telecom investors alike to start taking cable wireless much more seriously.”
As evidence of cable’s growing momentum, the analyst firm pointed to Comcast’s breakthrough in finally turning a profit from its MVNO business in Q1 2021; Charter’s plans to deploy CBRS spectrum to offload mobile traffic to its own network; and Comcast’s launch of a multi-line discount that makes its service more competitive with that of larger rivals.
Jeff Moore of Wave7 Research agreed the cable companies’ efforts are no joke, noting in a recent column Charter and Comcast “are in the position of being upstart competitors that are aggressively seeking share.”
In a fresh note issued Tuesday, MoffettNathanson predicted Comcast’s Xfinity Mobile service will hit nearly 7.9 million subscribers by 2025 and Charter’s Spectrum Mobile a little over 7.2 million in the same timeframe. Comcast ended Q1 2021 with 3.1 million wireless lines and Charter with nearly 2.7 million.
Given the U.S. market is already “more or less fully penetrated” Moffetnathanson noted cable’s gains will come at the expense of wireless incumbents and tipped AT&T and Verizon to feel the most pain. “We are effectively forecasting zero subscriber growth for AT&T over five years; for Verizon we assume below-market growth as the company loses share to both T-Mobile and cable wireless,” the analysts wrote. They added T-Mobile will also feel pressure from cable, albeit "to a lesser extent."
Mark Lowenstein, managing director of Mobile Ecosystem, offered a different take. He told Fierce he expects “cable will grow at a steady pace. However, I'm not expecting anything breakout, especially since the MNOs control the levers somewhat, through the wholesale pricing they're offering to cable. And cable hasn't announced any major new or incremental investment in the Wi-Fi piece.”
He added cable’s wireless role in the enterprise sector – a segment aggressively being pursued by T-Mobile – “is minimal” thus far.
Lowenstein concluded: “Major change/growth/disruption will only happen if another MNO, such as T-Mobile, or more likely Dish, offers cable more favorable pricing, allowing them to be even more aggressive with their wireless ambitions.”