Charter to Sprint: Not interested in a merger

There won’t be a merger between wireless operator Sprint and cable company Charter Communications if the cable company has any say in it.

A Charter spokesman told the Wall Street Journal that the company recognizes the benefits of a deal for Sprint and its owner SoftBank Group but that it did not share the vision.

“We understand why a deal is attractive for SoftBank, but Charter has no interest in acquiring Sprint,” the Journal quoted spokesman Alex Dudley as saying.

Shares of the Overland Park-based wireless company were off 11 cents at $8.11 in morning trading Monday in reaction to the news and Friday’s unconfirmed report from the Journal. Shares of Charter, which owns Spectrum formerly called Time Warner Cable, jumped 4.5 percent, climbing $16.74 to $387.

Analyst Amy Yong with Macquarie Research explained in a note to investors. Although a merger would be disruptive – by combining cable and wireless products for consumers – this deal simply doesn’t seem likely. It might, however, be part of a larger plan.

“Sprint’s pursuit has been met with little interest from Charter and could be a way to gain leverage in a (T-Mobile) TMUS deal,” she wrote in a Monday note.

T-Mobile shares also fell Monday morning, down 22 cents at $61.56.

Previous reports said that Sprint had broken off its talks with T-Mobile to hold exclusive talks with cable operators Charter and Comcast.

Yong declared that beyond Charter’s cool reception, combining the ownership structures of Sprint and Charter would be complex, and the firms already carry a lot of debt.

Sprint is controlled by Tokyo-based SoftBank Group Corp., whose founder and CEO Masayoshi Son is chairman of Sprint. Charter’s largest share holder is media mogul John Malone’s Liberty Media Corp.

A Sprint spokesman declined to comment on the Friday report, which comes ahead of Sprint’s quarterly earnings report and customer count update Tuesday morning.

Analysts have speculated about many potential deals among cable, wireless and other companies in an expected wave of deals. First on their list has been a tie up between Sprint and rival T-Mobile, with expectations that the combination would generate billions of dollars in cost savings and other benefits.

A Sprint/Charter merger still would make sense because of the potential for being able to offer wireless services along with cable and internet to consumers as a combined product. Yong said Verizon recently had explored a possible deal with Charter.

Cable giant Comcast already has begun to offer wireless service to its customers under an agreement that allows it to use the Verizon network. Charter similarly has a deal to use wireless networks but has not launched a service offer.

This story was originally published July 31, 2017 at 10:06 AM with the headline "Charter to Sprint: Not interested in a merger."