The internet has been aflutter with rumors that Verizon has the acquisition of Charter on its mind. A piece in the Wall Street Journal this week reported Verizon CEO Lowell McAdam made a “preliminary approach” to the cable operator. However, the paper quickly noted Charter executives’ ideas on the matter are not known. Earlier this month, the New York Post reported McAdam was overheard discussing a potential cable acquisition at CES 2017 in Las Vegas. And as you can read about more here in Wireless Week, TCI hedge fund founder Chris Hohn suggested last month the possibility Verizon could look to buy Charter at some point.
However, in a blog posted yesterday, MoffetNathanson showed skepticism of any Verizon-Charter deal.
“We could go in any of a number of directions in sharing our first thoughts on the news that Verizon has approached Charter about a possible combination. There are strategic implications, financial implications, legal questions, and implications for a myriad of other deals,” the blog states.
The blog also reviews why Verizon would be interested in such an acquisition since “the next generation of wireless will be about small cells with small radii. And every one of those cells needs to be connected to a wire. That means lots and lots of wires. And cable has the most wires.”
MoffetNathanson questions whether it’s a deal Verizon could actually afford to pay for. And that’s not all. It goes on to review further financial and regulatory hurdles in detail, which the firm suggests make the potential deal not impossible, but unlikely.
More on MoffetNathanson’s ideas around Verizon-Charter is here. (Subscription is required.)
