Time Warner Cable Inc.
) - the second largest cable Multi Service Operator (MSO) in the
U.S. is contemplating to tie up with Megacable - a triple play
service provider in Mexico, to provide phone service targeting the
U.S Hispanic customers.
Megacable, which already holds a marketing deal with Mexican
Grupo Televisa, S.A.B
), is negotiating with Time Warner to form a strategic alliance,
which will allow the U.S. cable MSO subscribers to receive phone
calls from Megacable customers in Mexico at discounted long
Last year, Megacable tied up with the Mexican subsidiary of
) to offer a wireless service, which hasn't become very successful
till now. We believe that if this proposed joint venture actually
materializes it will expand its operational boundary coupled with
opening up a new revenue stream for the company, which is facing
stiff competition in its core broadcasting business within
Recently, arch rival
) has launched the Xfinity Triple Play MultiLatino service, which
includes high-speed internet services, a wireline service with 300
free international minutes and the MultiLatino TV video programming
and services targeting the Hispanic customers.
This is a strategic move by the company to counter Comcast's
XFinity Triple Play MultiLationo service. We believe this proposed
service will specially attract the Central and Latin American
customers residing in North America as it is expected that they
will spend more voice minutes with the Hispanic Heritage Month just
round the corner.
The current Zacks Consensus Estimate for Time Warner Inc. is
pegged at $1.39 for the third quarter of 2012 with a growth rate
estimate of 25.23%. For 2012, the Zacks Consensus Estimate stands
at $5.62 with a growth rate of 20.16% while for 2013, the Zacks
Consensus Estimate stands at $6.85 with a growth rate of
We retain our long-term Neutral recommendation on Time Warner
Cable Inc. Currently, it has a Zacks #3 Rank, implying a short-term
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