Comcast is heading for its best day in 18 years, while other telecom stocks are falling. What's the reason?

Shares of the American telecommunications company Comcast jumped nearly 17% during trading on June 29, but then slowed their gains slightly—they are up about 6% at the time of publication. This could be the company’s best performance since October 2008, notes MarketWatch. Investors reacted this way to Comcast’s announcement of plans to split its business into two publicly traded companies: one will focus on the media business, including NBCUniversal and Sky channels, and the other on broadband and wireless services, explains the Associated Press.

Yahoo Finance notes that Comcast's stock is rising while shares of other telecom companies are falling. Seeking Alpha emphasizes that the decision to split up Comcast reflects ongoing changes in the media sector.

Comcast plans to spin off NBCUniversal and Sky's media channels into a new publicly traded company, which, among other things, will include business segments such as theme parks, film and television studios, and the Peacock streaming service.

Comcast itself will retain business units such as cable TV, broadband Internet service, and wireless communications, and following the spin-off, shareholders will hold shares in both companies. The deal is expected to close in about a year. Before that, it must be finally approved by Comcast’s board of directors and regulatory authorities.

After spinning off NBCUniversal into a separate company, Comcast plans to retain a stake of up to 19.9% in the subsidiary for one year after the transaction is completed.

The spin-off of Comcast's business could trigger a new wave of deals in the media industry, Barron's notes. According to the publication, Wall Street had been expecting the American television company to take such a step, given the lack of clear synergies between Comcast’s two main divisions. The company took this step amid a 30% decline in its market value over the past 12 months, CNBC reports —the network attributes this trend to the challenges facing the U.S. media industry, — specifically, the shift from bundled TV services to streaming.

Seeking Alpha notes that Comcast’s stock rose while other telecom stocks fell. For example, AT&T shares lost 3.68% on June 29 (at their lowest point, they were down 6%), T-Mobile shares fell 4%, and Verizon shares dropped 8% (at the time of publication, they were down 5.8%). Yahoo Finance notes that AT&T is under pressure due to the departure of its CFO, a downgrade of the stock by an Oppenheimer analyst citing growing competition from satellite providers in the broadband internet sector, and the removal of AT&T from the Russell Top 50 index. Verizon, in turn, is being negatively affected by the removal of its shares from the Dow Jones Industrial Average ( Alphabet shares now occupy that spot). The publication cites concerns about the disruptive impact of satellite broadband internet services—primarily SpaceX’s Starlink—on these companies’ businesses as a common negative factor. Against this backdrop, the spin-off of Comcast’s businesses offers a different path to unlocking potential, Yahoo Finance notes.

Nevertheless, analysts remain cautious about Comcast stock for now: the majority—17—recommend holding it in their portfolios, seven advise buying it (with “Buy” and “Outperform” ratings), and three recommend selling it. The consensus price—$32.19 per share—implies an increase of nearly 39% from the previous close.

This article was AI-translated and verified by a human editor