Comcast, Time Warner Cable to sit out auction
NEW YORK (Reuters) - Comcast Corp (CMCSA.O) and Time Warner Cable Inc (TWC.N) said on Monday they will not bid in an upcoming auction of 700-megahertz wireless airwaves, sending shares of both companies higher as the news eased investor fears of heavy capital expenses.
Comcast, the largest U.S. cable TV operator, said in a statement it already had "many strategic options" as a member of a cable industry consortium that acquired a piece of wireless spectrum in a Federal Communications Commission auction last year.
Glenn Britt, chief executive of No. 2 U.S. cable operator Time Warner Cable, told investors at a UBS Conference on Monday that the company would also not be taking part in the auction, which is due to begin in January.
Shares of Comcast climbed more than 3 percent, while Time Warner Cable rose nearly 4 percent. Investors had been concerned that the cable companies would invest billions of dollars in building a new wireless network to add to their voice, video and Internet services.
"I think a lot of people had discounted it, but this is the final indication that they're not going to go out and start a wireless company," said Todd Mitchell, analyst at Kaufman Bros.
"I think it's going to be an expensive auction and it's rigged towards the incumbent phone companies, so it's nice to see Comcast remove itself," said Mitchell.
Investors have sold off cable shares on news of further heavy capital expenditure, in addition to routine investment to build cable plants, for fear of low returns.
"(It) should remove some overhang on the stock as investors were previously concerned about the potential for significant spending, not only in the auction but also on a network build-out," said Thomas Eagan, analyst at Oppenheimer Co, in a research note.
The statements by Comcast and Time Warner Cable came hours before a FCC deadline for bidders in the auction to file applications formally declaring their intention to bid.
One potential bidder, start-up company Frontline Wireless, did confirm on Monday that it was filing an application to participate in the auction.
Frontline is proposing to use one of the blocks of spectrum to build a national network shared with commercial and public safety users. It is being backed by two former FCC chairmen, Reed Hundt and Mark Fowler, as well as former U.S. FBI Director Louis Freeh.
"We are bidding to win and to put into operation the principles of open access and a shared network for public safety, which we've championed from the start of this debate," Frontline spokeswoman Mary Greczyn said.
The FCC-run auction of 700-MHz wireless spectrum is due to begin on January 24 and is expected to take several weeks.
The radio waves are being returned by broadcasters as they move from analog to digital signals early in 2009. The signals can go long distances and penetrate thick walls.
On Friday, Internet leader Google Inc (GOOG.O) said it would bid on the airwaves. Other expected bidders include top U.S. wireless providers AT&T Inc (T.N) and Verizon Wireless, a joint venture of Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L).
The auction is seen as a last opportunity for a new player to enter the wireless market. Google and other Silicon Valley leaders see the wireless spectrum as a way to create more open competition for mobile services and devices than those available on existing networks.
Comcast shares climbed 49 cents to $21.03 on Nasdaq late Monday afternoon. Time Warner Cable rose 87 cents to $26.90 on the New York Stock Exchange.
- Mexican train derails, stranding 1,300 migrants headed toward U.S.
- Gaza toll nears 100, Israel to counter rockets 'with all power' |
- Texas mass murder suspect collapses in court as crime recounted
- Ukraine says rebels will pay as missiles kill 23 soldiers |
- British 'Harry Potter' actor David Legeno found dead in U.S. park