Comcast Corp and Charter Communications Inc on Monday announced a wireless partnership, as the cable providers seek to add more services in a bid to reduce customer churn.
The deal will also help speed up their entry into the highly competitive and over-saturated market for mobile service in the United States.
Comcast is moving into wireless as cable companies seek to offset customer attrition, as younger viewers increasingly shun high-priced subscriptions in favor of cheaper online options.
The move could affect wireless carriers including AT&T Inc and Verizon Communications Inc, which could be hurt by additional subscriber losses, said New Street Research analyst Jonathan Chaplin.
AT&T and Verizon already face stiff competition from smaller rivals T-Mobile US Inc and Sprint Corp.
As part of the agreement, Charter and Comcast cannot make “material” transactions in the wireless space for a year without the other’s consent, Comcast said in a filing with regulators.
The material transactions may include acquisitions, investments or joint ventures that have a value of more than $200 million.
The agreement could help pave the way for a merger between Charter and Comcast in the future, New Street Research’s Chaplin said.
“(The partnership) will also enable us to provide more competition and drive costs down for consumers at a similar national scale as current wireless operators,” Charter Chief Executive Tom Rutledge said in a statement.
Charter’s shares were down 2 percent at $328.03 in early trading, while shares of Comcast were slightly higher at $39.10.