Sprint is in advanced talks with Comcast and Charter to form a partnership which will help the U.S.-based cable companies expand their wireless offerings, reports The Wall Street Journal, citing sources familiar with the matter. Due to the ongoing talks with Comcast and Charter, Sprint has put the merger talks with T-Mobile US Inc on hold, the report states.
How Sprint could help Comcast and Charter
Companies like Amazon, Netflix and Google’s YouTube have made huge profits by offering online streaming services to consumers who are no longer interested in conventional packages offered by cable companies. Therefore, it is a reasonable move for the cable companies to move with the change and offer customers the thing they really want.
However, as of now, it is not clear how exactly the collaboration between the cable companies would work. One way might be for Sprint to receive investments from the two leading cable operators and in exchange, give them the network to enhance their Wi-Fi-focused mobile services.
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The ongoing talks with Sprint should be seen in the light of Comcast and Charter looking to expand in the wireless business by adding another product in the range of services they are offering as of now. Comcast and Charter are keen on expanding their wireless networks to boost their offerings in television, Internet and wired phone, especially since AT&T acquired DirecTV.
Thus, the cable companies will want to cut a deal with Sprint for a wireless resale agreement that will offer them the services at more favorable terms compared to what they currently have with Sprint and Verizon, says Bloomberg. John Malone, Charter’s largest shareholder, hinted that such a development was in the cards last fall. Then in May, the cable giants said they would jointly “explore potential opportunities for operational cooperation in their respective wireless businesses to accelerate and enhance each company’s ability to participate in the national wireless marketplace.”
Sprint and T-Mobile merger still in the cards
Sprint tumbled to the fourth position in the United States, and therefore, owner Softbank is looking to ink a deal with T-Mobile, which is at the third spot, to increase its scale and subscribers. Although the potential merger has been put on hold as of now, it could be reopened once the ongoing agreement talks reach some conclusion. Sprint and T-Mobile executives never shied away from publicly talking about the synergies of the potential merger.
Analysts are, however, of different views, stating that the nature of the deal will be complex and that it may or may not work out. The merger would also need the approval of federal regulators, and many analysts believe that it will not be easy to get their approval. Also, according to the WSJ, the two wireless carriers have not come anywhere close to striking a deal, and a merger is the most likely solution.
As of now, there have been no comments from representatives of SoftBank, Sprint, T-Mobile, Comcast and Charter.