Comcast and Charter, the nation's No. 1 and No. 2 cable companies, confirmed Monday a deal to cooperate with their wireless ventures, swiftly cutting off speculation that cable-TV operators and wireless companies would be merging into wireless-cable-internet giants.
Because of the partnership deal, the companies agreed to seek approval from each other on their next big move in wireless over the next year — what telecom analyst Craig Moffett called a "no-adultery clause."
This means that Comcast and Charter would have to approve their plans to either buy a wireless company or be acquired by one, tipping each other off about their plans and agreeing to them.
In the telecom equivalent of musical chairs in recent months, rumors have had Comcast buying Sprint or T-Mobile, and Verizon Communications acquiring Comcast or Charter.
Charter's stock on Monday fell $10.97 a share, to close at $323.81, as analysts no longer considered it takeover bait for Verizon that justified a takeover premium.
As for Comcast, Wall Street need not worry about it spending billions of dollars on Sprint or T-Mobile, said Telsey Advisory Group analyst Tim Eagan. The Philadelphia company's shares rose modestly, 19 cents a share, to close at $39.20.
Eagan also noted some skepticism over whether the partnership will be meaningful, given the "litany of prior cable coalitions on wireless" in previous years.
Moffett said the Comcast/Charter partnership "pours cold water on all the various [merger and acquisition] scenarios about which people have so incessantly speculated."
Comcast is expected to launch its Xfinity Mobile wireless product within the next few weeks by reselling Verizon's spectrum under the Xfinity brand. Comcast CEO Brian Roberts said he was "excited to work with Charter to explore ways we can make our respective wireless initiatives more efficient and cost effective."
Charter CEO Tom Rutledge said that the company has a "tremendous opportunity in front of us in the wireless space. Within our footprint, our network is perfectly suited to provide the data-rich wireless services that customers are increasingly demanding."
Working with Comcast enables Charter to enter the wireless market more quickly, he said.
In 2016, Charter bought Time Warner Cable, then the nation's No. 2 cable operator, after the federal government opposed Comcast's $45 billion deal for Time Warner Cable.
A wireless partnership between Comcast and Charter would encompass the nation's largest cities and millions of WiFi hot spots. It also protects the traditional market boundaries of the cable-TV operators, preventing them from competing with one another for wireless customers.
Comcast and Charter are expected to jointly develop back-office operations that can be shared, such as billing and device-ordering software for smartphones. The two companies also can standardize the data traffic communications between the two cable systems.