Sprint talks with Charter as it awaits word from T-Mobile: reports

SoftBank Masayoshi Son at Mobile World Congress 2017
SoftBank CEO Masayoshi Son delivers a keynote address during Mobile World Congress earlier this year.

SoftBank is reportedly holding out hope it can salvage a deal to merge Sprint with its U.S. rival T-Mobile. In the meantime, though, the massive Japanese corporation appears to have reopened talks with Charter Communications to bolster its U.S. carrier.

SoftBank, which owns more than 80% of the fourth-largest U.S. wireless carrier, has largely withdrawn from negotiations to partner up with T-Mobile in a deal that would see the U.S. market consolidate into a segment of three major service providers of roughly the same size. SoftBank reportedly has balked at giving T-Mobile—and its parent company, Deutsche Telekom—control over the combined carrier.

Bloomberg reported earlier this week that SoftBank CEO and Sprint Chairman Masayoshi Son is still waiting to hear from Deutsche Telekom “on an eleventh-hour bid” to save the tie-up between the two U.S. carriers.

But the New York Post reported late Wednesday that SoftBank is in talks negotiations with “high-level executives” at Charter Communications to forge an alliance between the U.S. company and Sprint. SoftBank’s Son initiated those talks, according to an unnamed source cited by the Post, but merger negotiations “may not yet be advanced,” the newspaper said.

While a tie-up between Sprint and T-Mobile could still occur—New Street Research said earlier this week such a deal could create $50 billion in value between the two operators—a merger between the cable company and the wireless carrier would also make sense on several levels. Charter lost 104,000 pay TV subscribers in its most recent quarter as revenue, EBITDA and free cash flow all fell short of expectations, New Street reported.

Meanwhile, it’s still unclear whether Sprint can thrive in a U.S. wireless market that has grown more competitive in recent quarters. The nation’s fourth-largest carrier has compiled an extremely valuable portfolio of spectrum, it has grown its market share in recent quarters through aggressive promotions, and it continues to cut costs in major ways. But the operator is still billions of dollars in debt, much of which will come due over the next few years, and questions remain regarding its ability to finance a network build-out to leverage its valuable airwaves.

Sprint struck an exclusive two-month deal beginning in May to hold discussions with both Comcast and Charter focusing on potential partnerships regarding forging a wireless partnership. The cable companies were said to be interested in launching an MVNO-type offering, and one potential arrangement could see them take an equity stake in Sprint and investing in the carrier’s network.

Both Comcast and Charter have MVNO agreements in place with Verizon, of course, and Comcast has already launched its Xfinity Mobile offering. But Sprint reportedly offered more palatable terms at the time, according to a Bloomberg report.

If Sprint and SoftBank truly can’t negotiate a palatable offer with T-Mobile—and that increasingly appears to be the case—it may decide Comcast is an acceptable alternative.