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How the Sunrun Deal Could Boost Comcast’s Smart Home Business

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About the deal

In August 2017, media conglomerate Comcast (CMCSA) entered an agreement with one of the leading residential solar power operators in the US, Sunrun (RUN). The deal could help Comcast boost its smart home business.

In the 40-month deal, Comcast will market Sunrun’s rooftop solar systems in selected states where the cable giant operates. At the end of 3Q17, Comcast had nearly 29 million subscribers, and its Xfinity Home service already includes home security and temperature control.

According to the deal, Comcast will charge fees from Sunrun for bringing in new customers. Comcast is also entitled to receive a 9.99% warrant of Sunrun’s stake if the cable leader can convert 60,000 customers.

Initially, Comcast will be a part of a one-year solar pilot program wherein its subscribers will be able to install Sunrun’s BrightSave plan. Users of the plan will have the liberty to enjoy rooftop solar power for 20 years at a fixed monthly rates.

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Benefits of the deal

The partnership with Sunrun may allow the company to offer more choices to its customers. It may also help its smart home customers to control automated electric usage, thereby saving on electric bills.

Moreover, the fees to be received from Sunrun may drive the company’s Other unit revenues, of which smart home and security is a part. In 3Q17, the Other unit generated nearly $700 million in revenues, or 8% higher year-over-year. By selling more bundled products at an attractive rate, Comcast could downplay competition against telecom and cable operators like Verizon Communications (VZ), AT&T (T), and Charter Communications (CHTR).

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