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Deutsche Bank: Comcast's Xfinity Mobile Service 'A New Growth Driver'

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Deutsche Bank: Comcast's Xfinity Mobile Service 'A New Growth Driver'

Comcast Corporation (NASDAQ: CMCSA)’s leap into the mobile market could add billions to the company’s service revenue, but cable subscriber growth and retention remain job No. 1, according to Deutsche Bank.

XFinity Mobile, the wireless service announced Thursday by Comcast, will be offered to the telecom company’s 25 million broadband users, CNBC said in a report. The service will use Verizon Communications Inc. (NYSE: VZ)’s network. Comcast announced its intention to launch a wireless service at an investor meeting last fall. If 13 percent of Comcast’s broadband subscribers add mobile service by 2022, the wireless offering could bring an additional $4.65 billion in service revenue and $645 million in service EBITDA, Deutsche analysts Bryan Kraft said in a note.

Deutsche maintains a Buy rating on Comcast with a $44 price target.

Xfinity Mobile’s Pros And Cons

Comcast must pay Verizon for the use of its 4G network, but will also realize cost advantages in marketing and sales, Kraft said.

“We think that mobile will be a new growth driver that will help to offset voice revenue declines” at Comcast, the analyst said.

The Deutsche note named consumer inertia and competition as the most significant challenges to Comcast’s subscriber growth.

The cable company’s subscriber base represents a potential pool of 60 million wireless services lines, according to Deutsche Bank estimates.

The wireless plans include one with unlimited data for $65 a line, as well as an option to pay $12 per gigabyte per line, according to CNBC. Customers with more expensive X1 cable packages will be able to purchase an unlimited wireless data plan for $45.

Some Comcast customers — including lighter wireless users and families — might find the plans attractive, said Deutsche’s Kraft. A free plan with unlimited voice and text and 100 MB of data per month is “a great option for younger children and the elderly,” the analyst said.

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Image Credit: By Robert Scheuerman (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons

Latest Ratings for CMCSA

DateFirmActionFromTo
Feb 2020MoffettNathansonUpgradesNeutralBuy
Jan 2020CitigroupMaintainsBuy
Jan 2020Raymond JamesMaintainsOutperform

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