Why the Sprint and Altice USA MVNO model is one to emulate (S, ATUS, QCOM, VZ, CMCSA, CHTR)

The current cable mobile virtual network operator (MVNO) business model being deployed by Verizon for its partnerships with Comcast and Charter is, respectively, in need of an overhaul.

Cable MVNOs Are Growing Their Collective Net Adds

For background, Comcast, which launched its mobile service Xfinity Mobile in May 2017, and Charter, which entered the space with Spectrum Mobile in July 2018, both offer wireless services that can be accessed through their own network of Wi-Fi hotspots but fall back on the Verizon network that they lease when Wi-Fi isn’t available.

While the cable companies entered the wireless carrier arena to remain competitive in the evolving US telecom landscape, the economics of the deal aren’t working out for Charter and Comcast. The MVNOs aren’t profiting off the deals, according to MoffettNathanson principal Craig Moffett.

For example, although Xfinity Mobile has added over 1.2 million subscribers since its launch, it’s lost over $1 billion in the same period, according to RCR Wireless News. This is likely partially due to the MNVOs having to pay Verizon per gigabyte used by their customers.

Here’s what it means: Charter and Comcast should take a closer look at the deal Altice USA has struck with Sprint as a potential MVNO model to emulate.

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