Comcast Corp.’s Xfinity Mobile business is running big losses — a projected $1.2 billion for its first 18 months — as it launches against competitors Verizon Communications, AT&T, T-Mobile, and Sprint.
But the nation’s largest cable/internet company will now be getting financial help to take some of the pain away.
Charter Communications Corp., the nation’s No. 2 cable/internet company, has agreed to a partnership to fund 50 percent of the logistics and behind-the-scenes software for the smartphone business so that Charter can use the same software platform for its soon-to-launch Spectrum service.
Charter is expected to launch the new service this summer, mostly based on Comcast’s model.
The Charter funding will help finance Xfinity Mobile’s Philadelphia development team, company officials say. Comcast did not disclose the amount of the funding or the development team size.
Comcast and Charter will separately advertise and market their mobile services, in addition to separately negotiating with smartphone manufacturers such as Apple and Samsung. But the two companies will share the software platform that handles the billing and warehouse logistics, manages the plans, and orders the phones. The software also serves as the interface between the cable/internet companies and wireless network operators. Comcast and Charter basically lease wireless spectrum from Verizon to offer the smartphone service.
Comcast has been developing the software for more than a year. Xfinity Mobile launched around mid-2017. So, Charter will make an initial payment to the partnership to cover the costs that Comcast has already put into the software. Going forward, Comcast and Charter will fund the partnership on a 50-50 basis.
According to its first-quarter earnings statement, Comcast added about 200,000 smartphone subscribers in the first quarter and lost $189 million on the business. Comcast executives say Xfinity Mobile will be profitable when the business gets larger.
The wireless business is highly competitive and expensive to break into. The nation’s No. 3 and No. 4 wireless carriers, T-Mobile and Sprint, recently agreed to a deal to merge. Regulators are expected to scrutinize the transaction for potential harm. Sprint and T-Mobile noted the emergence of new competitors in the wireless industry, including Comcast and Charter.
The Comcast/Charter partnership will be managed by a four-member board that will be comprised of two people from Comcast and two from Charter.