Comcast Corp (CMCSA)

NetscribeTelecom (97.61) Submitted: 11/22/06 1:05 AM : Start Price: $26.74 CMCSA Score: -5.40

“The bigger, the better” if there is one company that would like to highlight this view is Comcast Corporation. The largest broadband cable provider in the United States offers a wide variety of consumer entertainment and communication products and services, serving more than 21 million video subscribers, 8 million high-speed Internet subscribers and 1 million phone subscribers.

With operations being spread across more than 35 states, the company is the market leader in multi-channel video program distribution (MVPD) with approximately 28% market share (including proportional shares of non-wholly owned cable systems). Comcast enjoys a reputation as a savvy cable operator, and has shown impressive growth since its acquisition of AT&T Broadband in late 2002. Strategically moving ahead, its recent transactions include the acquisition of Adelphia cable systems and the dissolution of its Texas joint venture with Time Warner Cable.

The advent of the new technology has enabled telecom companies to provide triple-play services, high-speed Internet, video on demand and telephone services over a single broadband connection. With wireless and broadband services being projected as the key growth drivers for the U.S. telecom services industry, Comcast expects increasing digital video penetration through 2008. Going forward, increase in subscribers base, though marginal, and a gradual hike in its average revenue per unit (ARPU) envisages positive operating environment for the company.

Comcast is focusing on the residential market in the near-term, but will likely begin to address opportunities in the business market in future years to promote ongoing revenue growth. With cable segment revenue growth of 10-11% being anticipated for 2006, the company’s strong customer growth indicates that VoIP and the triple play bundle are working, driving solid unit growth across all services. Though, the higher P/E multiple vis-à-vis industry’s calls for apprehension, but overall we believe our thesis for Comcast continues to play out.

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