Sprint's Claure: We'd benefit from a merger with a cable MSO -- but no M&A is in the works

Sprint (NYSE: S) CEO Marcelo Claure said the carrier could be stronger if merged with a cable company, but added the company is not engaged in any merger discussions.


Combining Sprint with a cable company would make "us a stronger and more formidable competitor," Claure said in an interview with Reuters. "But there's absolutely no discussion."

Sprint rival T-Mobile US (NYSE:TMUS) became the subject of M&A speculation last week following French telecom conglomerate Altice's $17.7 billion deal to buy Cablevision (NYSE: CVC), with financial analysts suggesting T-Mobile could be in play for a cable operator. Altice also struck a $9.1 billion deal for Suddenlink Communications in May.

Altice Chairman Patrick Drahi said at the Goldman Sachs Communacopia conference last week he could "someday" see the company buying into the U.S. wireless market but that such a move would happen over time and "not next week." Doing so would allow Altice to offer a quad-play offering to U.S. customers of TV, fixed Internet, fixed voice and mobile services.

Claure said he had heard what Drahi said. "It seems like everybody now wants to get into wireless which puts Sprint in a very good position. So I think the next few months or years are going to be very active in this industry," Claure said. "I think it's going to be exciting times ahead in terms of consolidation but we don't have any conversations with anybody."

Sprint parent SoftBank increased its stake in Sprint from 79.6 percent to 81.9 percent by purchasing Sprint's shares in August and into early September, boosting the company's market value. However, Sprint burned through $2.2 billion in cash in the second quarter. To address this, Sprint and SoftBank have announced plans to establish two leasing companies for both handsets and network equipment for Sprint's network densification program. As a result, Sprint said it currently does not expect to raise additional capital through the public debt or equity markets in the foreseeable future, nor does it currently expect to sell any of its spectrum.

Meanwhile, T-Mobile CEO John Legere said last week at the Goldman Sachs conference that "the timing of the cable industry coming into the wireless industry is purely determined by who blinks first." He said to forget about potential deal structure and noted that with unlicensed spectrum (and presumably the ability to deploy LTE-Unlicensed technology, which T-Mobile supports), there are several technological and consumer benefits that a converged cable-wireless player could deliver.

For more:
- see this Reuters article

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