Comcast Corporation’s (CMCSA) subsidiary, Comcast Ventures, recently announced the formation of a new company, CTI Towers Inc. The newly-formed company will be responsible to own, operate, and develop wireless towers throughout the U.S.
Presently, CTI Towers roughly has 800 towers under its belt, which were earlier used and managed by Comcast Cable subsidiaries.
Demand for the 4G networks have been inflating ever since the deployment of the network, and it was further boosted with the increasing popularity of smartphone and tablets. Subsequently, the increased the demand would also put huge pressure on the network traffic, which, CTI Towers with a portfolio of 800 towers, will cash in heavily on such a scenario by leasing their towers to other carriers.
The newly-formed company along with its unutilized tower portfolio will work jointly with other telecom companies to provide adequate infrastructure support to them as these carriers keep on expanding their area of coverage.
Comcast has emerged asthe largest integrated content development and distribution company in the U.S.after completing the acquisition of NBC Universal.We also remain optimistic regarding the company’s diversification, network upgrade and innovative product offering strategies.
However, Comcast is facing severe competition from both telecom and satellite service providers that started offering subscription TV services at a lower price. Verizon Wireless (VZ) with its FiOS network and AT&T (T) with its U-Verse network are likely to make the market highly competitive. The recent growth of online video streaming companies such as Netflix Inc. (NFLX) and Hulu have become major threats to the company. Furthermore, the company has a huge debt, which also remains a major concern.
We, thus, maintain our long-term Neutral recommendation for Comcast. Currently, Comcast has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
