Sprint Seeks Deal With Charter -- WSJ
2017年7月29日 - 4:02PM
Dow Jones News
By Ryan Knutson and Dana Cimilluca
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 29, 2017).
Sprint Corp. has proposed a merger with Charter Communications
Inc. that would create a media and communications giant, upending
industries that are already in the throes of dramatic change.
Since the end of May, Charter and Comcast Corp. had been in
exclusive talks with Sprint over possible deals, including one that
would allow the cable companies to resell wireless service under
their own brands. Though the exclusivity window ended this week,
Sprint Chairman Masayoshi Son continues to pursue a much larger
deal with Charter, according to people familiar with the matter: a
full-blown merger of the two companies.
The complex proposal calls for the creation of a new publicly
traded entity that would combine Sprint and Charter and be
controlled by Japan's SoftBank Group Corp., the people said.
SoftBank, whose chairman is also Mr. Son, already controls
Sprint.
It is far from guaranteed that Charter would ultimately agree to
such a deal, and pulling one off would involve a high degree of
difficulty.
Should Mr. Son manage to succeed, the deal would be big: Sprint
has a market value of $33 billion and about that much in net debt.
Charter has a market value of nearly $100 billion after swallowing
Time Warner Cable Inc. last year and more than $60 billion of net
debt.
The resale deal the cable companies have been discussing, which
could have included an agreement to invest in Sprint's network and
possibly buy a stake in the wireless carrier, appears to have taken
a back seat to the merger talks. It is still possible, however,
that there could be a resale deal with Sprint instead of any
full-blown merger.
Before embarking on the resale talks, Sprint had been discussing
a possible merger with rival T-Mobile US Inc., an effort that could
now be rekindled alongside the Sprint-Charter talks, the people
said. Even if Sprint and Charter did strike a merger or resale
deal, it wouldn't preclude a subsequent tie-up between the new
group and T-Mobile, one person said.
When The Wall Street Journal first reported on the talks between
Sprint and the cable companies, people familiar with the matter
said they also included the possibility that Charter and Comcast
would together acquire the wireless carrier. John Malone, whose
Liberty Broadband Corp. is Charter's largest investor, had been
trying to convince Comcast Chief Executive Brian Roberts that the
companies should jointly buy a wireless carrier, people familiar
with the matter have said.
But Mr. Roberts has been reluctant and made comments on an
earnings call this week that played down the possibility that
Comcast would participate in any big wireless merger. "We really
feel we're not missing anything," Mr. Roberts said. "No disrespect
to wireless. It's a tough business."
As part of the deliberations, Mr. Son recently sought an
investment in Sprint that could total more than $10 billion from
billionaire investor Warren Buffett's Berkshire Hathaway Inc., the
Journal has reported. It isn't clear where that effort stands,
though one person said Mr. Son would need to corral such an
investment -- if not from Mr. Buffett than from someone else -- for
his current Charter bid to succeed.
Charter and Comcast, the two largest U.S. cable companies by
subscribers, in May agreed to a partnership that barred either
company from doing a wireless deal without the other's blessing or
participation for a year. Charter would therefore need Comcast's
approval for any merger with Sprint.
The backdrop of all the discussions is the convergence of the
cable and wireless industries as smartphones become increasingly
important and consumers rely more equally on cable and wireless
companies to surf the web and watch videos.
Combining with Sprint could help Charter retain customers and
fend off threats from cord-cutting and new rivals like Netflix Inc.
The idea is that adding mobile-phone service to bundles of TV,
phone and broadband internet service would make the offerings more
essential and cost-efficient.
A Sprint-Charter tie-up would follow another proposed
combination between media and telecommunications titans: the
roughly $85 billion marriage of AT&T Inc. and Time Warner Inc.,
which has prompted companies across both industries to rethink
their positioning and consider deals.
Meanwhile, wireless companies are engaged in a fierce price war
in a saturated market that is quickly eroding revenue. Unlike
Verizon Communications Inc. and AT&T, Sprint doesn't have an
extensive consumer wired network, so combining with Charter could
help speed the construction of next-generation, or 5G,
wireless-internet connections.
Sprint reports its fiscal first-quarter earnings Tuesday and is
expected to be grilled by analysts on its strategic options.
Write to Ryan Knutson at ryan.knutson@wsj.com and Dana Cimilluca
at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
July 29, 2017 02:47 ET (06:47 GMT)
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