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Why Sprint Could Benefit from an MVNO Agreement with Altice USA

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Feb. 1 2018, Updated 10:32 a.m. ET

Altice USA to venture into the wireless business

In November 2017, Sprint (S), the fourth-largest wireless service provider in the United States (SPY), announced a strategic mobile virtual network operator (or MVNO) deal with Altice USA (ATUS). As part of the contract, Altice will be allowed to access Sprint’s nationwide cell phone network and launch its wireless carrier service.

Altice, the fourth-largest cable company in the United States, will be able to offer mobile voice and data services to customers across its national footprint using Sprint’s extensive network.

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As such, the Sprint-Altice deal appears to mirror the reseller agreement that Verizon (VZ) struck years ago with cable service providers Charter Communications (CHTR) and Comcast (CMCSA). Comcast launched its wireless service in 2017 based on Verizon’s infrastructure, and Charter’s wireless service on the same infrastructure is expected to launch this year. Cable companies are expanding into the wireless market, while wireless companies such as Verizon and AT&T (T) are also increasing their media exposure. AT&T is currently seeking to procure Time Warner (TWX), the parent company of CNN.

Deal to help boost Sprint’s network

As for Sprint, its agreement with Altice could help it enhance its network. For example, the deal gives Sprint special access to Altice’s cable infrastructure to transmit wireless data.

Growth in mobile video traffic

The increasing focus on the wireless business from telecommunications (or telecom) and media companies has been majorly due to the rise in overall mobile video traffic. Based on Cisco’s (CSCO) VNI (Visual Networking Index), video is expected to make up nearly 77% of mobile data traffic in the United States by the end of 2020.

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