Comcast, Time Warner Cable to sit out auction

NEW YORK (Reuters) - Comcast Corp (CMCSA.O: Quote, Profile, Research) and Time Warner Cable Inc (TWC.N: Quote, Profile, Research) 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.