Telecom: The Deals of Summer

Carl Weinschenk

Things tend to slow down a bit in the summer, which gives people a chance to go to the beach – or look ahead to things that might happen once autumn arrives.

Two stories during the past week suggest three mega-deals that may be on the table: a merger between Sprint and T-Mobile, an acquisition of Charter by Softbank, or an acquisition of Sprint by Charter.

Reuters reported early last week that Softbank CEO Masayoski Son is said to be considering a bid for Charter, which could occur this month. The source told the site that the bid would at least half in cash, with the remainder in stock. Softbank is said to be working on the deal with JPMorgan Chase & Co., Deutsche Bank AG and Mizuho Financial Group. More banks may be added to the effort.

In what would be another option, the story also suggests that there is talk of a merger of Sprint, which is majority-owned by SoftBank, with Charter. Charter “shot down” the idea, the story said. The piece is short on specifics. Instead, it suggests why the dynamics of the cellular and cable industries provide a strong rationale for such deals.


Sprint is also front and center in the other rumor. Bloomberg reported that the wireless company has resumed merger talks with T-Mobile US. The talks were rejoined after the exclusive negotiating period between Sprint and Comcast and Charter expired at the end of July.

The story outlines the on-again, off-again conversations between T-Mobile and Sprint. At the highest level, the combination of the two companies makes sense because the combined entity would be better able to compete with AT&T and Verizon Wireless.

Clearly, one driver of the deals is Son’s desire to expand and extend SoftBank’s telecommunications holdings. These deals may also be gaining attention due to a feeling that the new leadership in Washington, D.C. is more agreeable than the Obama administration. Lexography points out that the Democrats, if they rebound, may make the going tougher for big telecom deals:

As part of their effort to recast their party platform in preparation for the 2018 mid-term elections, Congressional Democrats announced an economic agenda. It would impose significant new standards on major telecommunications, cable and other industry mergers, which Democrats cite as a factor behind rising prices, lack of competition, and reduced consumer choice.

The story describes the recently unveiled Democratic agenda, entitled “A Better Deal: Better Jobs, Better Wages, Better Future.” It’s a wide-ranging agenda and it is not insignificant that telecommunications deals, which typically are a bit arcane, are a major part of the mix. Son and executives at Sprint, T-Mobile, Charter and elsewhere certainly won’t make a deal that they don’t feel is beneficial for that reason. But the feeling that the window is closing may expedite things that are already on the table.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.

 


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