Undoubtedly, cable companies and wireless carriers compete with each other for market share. This week, the largest residential broadband provider in the US, Cox Communications, made a foray into the mobile space with the pilot launch of Cox Mobile. The latest move is intended to intensify competition in the mobile phone market. Companies that could be impacted by the growing rivalry include Comcast (NASDAQ:CMCSA) and T Mobile (NASDAQ:TMUS), under other names.
Cox’s new cellular service starts at just $15.00 for a cellular plan. This new mobile service will initially be available in three markets and will later be successively expanded to other markets. Cox already serves around seven million customers in 18 states, and customers of its new offering can access the Internet at home and through its more than four million WiFi hotspots.
The momentum, in turn, is a way for wireless carriers like T-Mobile to use excess capacity to bring in new users who previously used broadband.
Comcast is the largest cable network operator in the United States and a major name in film production and entertainment worldwide.
Last month, Comcast reported higher second-quarter revenue on gains at movie studios and theme parks, but overall subscriber numbers were flat. This was the first time Comcast had failed to add new broadband subscribers in about two decades. Charter also recently reported a decline in its user base.
What’s Comcast’s Stock Price Prediction for 2022?
Wall Street has a moderate buy consensus rating on the stock. The average Comcast price target is $46.83, which implies a 29.1% upside potential. That’s after a 28% decline in the stock price so far in 2022.
The trend in Comcast’s user base underscores fierce competition from wireless carriers like T-Mobile and Verizon Communications, which have added millions of users to their services.
Washington-based T-Mobile is a wireless service provider focused on the branded prepaid, postpaid and wholesale markets.
Shares of T-Mobile are up around 25% so far in 2022, and investors could see further gains given the company’s recent second-quarter performance. A net 1.7 million postpaid customers were added in the second quarter. That number was higher than AT&T and Verizon’s combined earnings for the period. In addition, the company continued to make strides in adding high-speed Internet users, ending the quarter with over 1.5 million customers. This means a net increase in customers of 560,000.
In addition, the company continues the integration of Sprint Corp. (which it acquired two years ago), a move that promises significant cost savings. The integration also means a loss of jobs as T-Mobile strives for synergies. The company has already reduced its headcount by thousands, but expects to hire more people by 2024 than either it or Sprint would have employed individually.
In addition, T-Mobile has also partnered with SpaceX to offer services in areas around the world that lack connectivity.
Is T-Mobile a Buy, Sell or Hold?
Analysts, meanwhile, have given T-Mobile a strong buy rating and the average TMUS price target is $174.53. This implies a 20.8% upside potential in the stock on top of its recent price gain.
Additionally, on August 29, Morgan Stanley’s (NYSE:MS) Simon Flannery reiterated a buy rating on T-Mobile alongside a price target of $159.
The analyst expects T-Mobile to conduct a share buyback program later this year and estimates $12 billion worth of buybacks in 2023. That’s a significant chunk of T-Mobile’s roughly $182 billion market cap -Dollar.
Who wins from these turf wars?
As cable operators and wireless carriers try to secure portions of each other’s turf, both have their limitations. Capacity constraints mean that carriers cannot add customers beyond a threshold. Cable companies do not have the cellular infrastructure and only retain an advantage in areas where they already have a presence and can offer new services as part of a bundled offering. The ultimate winners could be the consumers themselves, as increased competition can drive prices further down.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.