Can Comcast Benefit From Its “Prepaid” Home Internet Service?

+10.57%
Upside
43.23
Market
47.80
Trefis
CMCSA: Comcast logo
CMCSA
Comcast

According to our estimates, Broadband Internet accounts for nearly 20% of Comcast‘s (NASDAQ:CMCSA) valuation, and we expect it to generate around 20% of the company’s revenues over our forecast period.

Comcast 20170404

We expect Comcast’s broadband market share to remain steady at around 24% over our forecast period.

Relevant Articles
  1. Rising 15% Over The Last Year, Will Comcast Stock See Gains Following Q4 Results?
  2. Can Comcast Stock Recover 40% To Pre-Inflation Shock Highs?
  3. What To Expect From Comcast’s Q3 Results?
  4. Will Comcast Stock Return To Its Pre-Inflation Shock Highs?
  5. What To Expect From Comcast’s Q2 Results
  6. Will Comcast Stock Return To Pre-Inflation Shock Highs?

The company’s investment in upgrading its broadband infrastructure and bundling its services is likely to give it a competitive edge over other players, driving revenues from the segment.  In order to attract more customers, Comcast recently introduced “prepaid home internet” which can be availed by customers without a credit check. This service allows customers to pay for their internet connection in advance every month, and is aimed at consumers who do not have bank accounts or credit cards. According to data available with Comcast, 9 million U.S. households did not have a bank account as of 2015 and an additional 24.5 million had a bank account but used financial services outside the banking system. The prepaid service is aimed at targeting these customers since it gives these households the necessary flexibility to opt for a service depending on their financial needs.

With high broadband penetration in the U.S., the market is saturating somewhat and companies are looking at innovative ways to tap into newer customers, and a prepaid plan appears to be one. Comcast is hoping that its prepaid plan, which does not involve any contracts, will be a cheaper and more convenient option for customers. With several other players such as AT&T offering similar plans, it makes sense for Comcast to provide this option to compete better with these companies.

Comcast’s prepaid service does need customer to get an initial starter kit and covers only “Comcast ready” homes. This service could attract new customers who are looking for a flexible service and help the company retain existing subscribers who are not looking for long-term contracts. However, we do not expect the service to significantly impact Comcast’s revenues in the short term.
See our complete analysis for Comcast

View Interactive Institutional Research (Powered by Trefis):
Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research