Comcast Corp. and Charter Communications Inc. are striking a wireless partnership, people familiar with the matter said, as the cable giants look to get a piece of the cutthroat business.
As part of the deal, Comcast and Charter have agreed not to make a material merger or acquisition in wireless without the other's consent for one year, one of the people said. That agreement could stoke Wall Street speculation among investors and analysts that the two largest U.S. cable companies together could decide to make a play for a carrier like T-Mobile US Inc. or Sprint Corp. Neither company as a single entity could buy another wireless carrier for that time period as a result of that agreement, the person said.
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Comcast recently released plans to offer a wireless service to its customers and purchased airwaves that could be used to help offer it in a government spectrum auction.
Charter has said it would offer wireless service as soon as next year. Both plan to rely on a five-year-old agreement with Verizon Communications Inc. that allows them to resell Verizon's airwaves to offer cellphone service to their cable customers. Comcast plans to start offering its mobile service to customers as soon as later this month.
The new operational partnership will allow Charter and Comcast to share technology and work together to use their combined scale in vendor negotiations with the likes of Samsung for handsets, for instance, one of the people said. However, the two companies will keep their customer-facing wireless storefronts and mobile plans separate.
The idea is that the partnership will allow the companies to share what they learn about what works and what doesn't in service plans and achieve potential cost efficiencies.
Comcast and Charter will each still only offer wireless service within their respective cable footprints -- not nationwide, the person said.
The deal is likely to be announced on Monday, the people said.
Wireless carriers are fighting it out in a fierce price war, while cable companies like Comcast and Charter are dealing with a saturated pay-TV business under assault from threats like cord-cutting and cheaper online video services. The cable companies view wireless phone service as an opportunity to create a new product to make their bundles more appealing and better retain existing customers. They hope that by offering a "quad play" of cable TV, home internet, landline phone and wireless service, customers will be less likely to drop their service and jump to a rival.
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(END) Dow Jones Newswires
May 07, 2017 20:40 ET (00:40 GMT)