Comcast to Get Into Internet Phone Service
Posted on: Wednesday, 26 May 2004, 06:00 CDT
AP Photo PX102< By BILL BERGSTROM= AP Business Writer= PHILADELPHIA (AP) - Comcast Corp. chairman C. Michael Armstrong stepped down Wednesday, a year earlier than expected, and was replaced by chief executive Brian L. Roberts. The cable company also announced an aggressive push into telecommunications with Internet phone service.
At the company's annual meeting, Roberts singled out Internet phone service, using voice over Internet protocol, or VOIP, technology, as a new growth area. The move was a shift for Comcast, the country's largest cable company with 21.5 million subscribers, which previously had shown little interest in the phone service offered in the systems it acquired in its 2002 purchase of AT&T Broadband.
VOIP will be tested in systems in the Philadelphia suburbs, Indianapolis, and Springfield, Mass., this year, offered in half its systems by the end of the year and in 95 percent by the end of 2005, Roberts said.
Armstrong, 65, had been expected to retire in 2005 and be replaced by Roberts. Armstrong said Wednesday he was leaving early because the two companies' systems and boards were running smoothly, and he wanted to spend more time with his family, including 10 grandchildren.
Armstrong, who was AT&T's chairman and CEO before the merger, had attempted to build AT&T into a cable powerhouse, with deals including acquiring MediaOne Group and TCI that left the company with more than $60 billion in debt.
On Wednesday, he called the Comcast-AT&T deal a success, citing its combined fiber optic network capable of carrying voice, video and data services to nearly 40 million homes.
"That is a key differentiator that this company takes forward into the marketplace, the ability over one network in one to do all three services in a seamless fashion," he said.
Also Wednesday, Roberts told shareholders that other potential growth areas include high-speed Internet and video-on-demand services satellite television can't match. Comcast currently offers digital video recording capability in 17 percent of its systems and expects to have it in all systems by the end of the year, he said.
Comcast reduced its debt of $34.8 billion in November 2002 to $22.7 billion by the end of 2003, and expects free cash flow, after paying interest, taxes and capital expenses, of $2 billion this year, Roberts said.
Analysts have suggested Comcast now is looking for potential growth areas after dropping its unsolicited bid for The Walt Disney Co. on April 28.
"If they needed Disney, the need doesn't go away," said Jeff Kagan, an independent telecommunications analyst based in Atlanta. "It's a great company, run by great leadership, but it has a soft underbelly: Where is growth going to come from?"
Roberts told shareholders he's not worried.
"On Disney, we've moved on," Roberts said. "We think our company's in great shape."
Comcast's stock was up 11 cents at $29.68 on the Nasdaq Stock Market.
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