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Cable's continued mobile growth

U.S. cable operators Charter Communications Inc. and Comcast Corp. have seen steady mobile growth in recent quarters, and company executives say they expect that trend to continue.

During the September quarter, Charter's Spectrum Mobile added 276,000 subscribers, building on 208,000 additions in the second quarter. The wireless service, which partially launched in June 2018 before its full-scale rollout in September of that year, counted a total of 794,000 mobile lines as of Sept. 30.

Meanwhile, Comcast's Xfinity Mobile added 204,000 customers in the just-ended quarter, up from 181,000 adds during the second quarter. The offering, which launched two years ago, had 1.79 million lines as of Sept. 30, representing a 78% increase from a year ago.

Charter Chairman and CEO Tom Rutledge in October called the company's latest mobile line adds "very encouraging." He credited the results to the expansion of Charter's Bring Your Own Device program to all of Charter's sales channels and the introduction of the offering to small and medium-sized businesses. Under the BYOD program, customers can activate some smartphones from Apple Inc. and Samsung Electronics Co. Ltd. at Spectrum Mobile retail outlets and via its website or customer service.

"We are uniquely positioned to take advantage of wireline and wireless network conversions over time with our fully distributed wireline network, ultimately positioning us for long-term growth," Rutledge added.

Comcast executives were equally positive about their mobile business, with CFO Michael Cavanagh on an October earnings call saying it is another "important" growth driver beyond broadband.

Bernstein analyst Peter Supino, who recently initiated coverage of Charter, Comcast, T-Mobile US Inc. and Verizon Communications Inc., said cable appears to be well positioned, based on its strong broadband performance and renewed prospects for mobile growth. In a research report, Supino wrote, "with margins and [free cash flow] likely to improve and video less important to financial results, cable stocks enjoy multiple valuation tailwinds."

But Walter Piecyk, partner and analyst at Lightshed Partners, a technology, media and telecommunications research firm, is less bullish on cable operators' mobile ambitions.

"It was only a few years ago that investors feared Comcast and other cable operators would become major disruptors to the wireless industry, destroying margins and spiking industry churn," Piecyk wrote in a note. "It's no longer 'too early' to draw conclusions. They aren't."

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