Sprint happily pointed to its first positive net income figure in three years during its Tuesday earnings call, but executives couldn’t avoid addressing the M&A elephant in the room. CEO Marcelo Claure offered some interesting comments on that front, not the least of which was the hint that a deal announcement is “coming in the near future.”
Claure offered no clues as to who Sprint’s deal partner might be, saying the carrier has been “speaking with pretty much everybody.” However, he did directly address a recent report that Charter declined an offer to buy Sprint. Claure said he was “surprised” by Charter’s statement on the matter, noting the carrier “never pitched” a deal to sell itself to the cable company.
“(I have) no idea why Charter said we are not interested in buying Sprint,” Claure said. “I have no idea what offer they are refusing.”
But Claure said the logic of a deal with a cable company like Charter is obvious. It’s no secret, he said, that cable companies have built infrastructure that could be used by wireless carriers in their densification efforts ahead of 5G. Cable companies also offer the additional prospect of bundled services, which help reduce churn, he added.
Claure noted a merger with another carrier like T-Mobile also offers obvious benefits, and said Sprint’s talks with the Un-carrier and its parent company Deutsche Telekom have been “encouraging.”
Technology Business Research Telecom Analyst Steve Vachon offered similar views about Sprint’s merger prospects.
“Joining up with a cable operator would enable Sprint to enhance its competitiveness and value proposition as the mobility and video industries more deeply converge. Collaborating with a video provider will help Sprint keep in step with AT&T’s DirecTV Now wireless bundles and a potential upcoming nationwide Verizon TV streaming service, enabling the carrier to more deeply cement its subscriber base amidst heightening competitive pressures,” Vachon wrote. “A tie-up with T-Mobile also provides great opportunity as both companies position to offer 5G mobility services in the 2019-2020 timeframe. Sprint’s vast 2.5 GHz spectrum holdings coupled with the success of T-Mobile Un-carrier go-to-market strategies would create a formidable opponent for AT&T and Verizon in the 5G era.”
But MoffettNathanson analysts cautioned that broadcasting discussions with multiple parties isn’t always a good thing.
“The obvious risk in so openly courting one potential suitor after another is that Sprint will increasingly be viewed as damaged goods,” they wrote Tuesday. “Like an unsold house that has sat too long on the market, as asset that has been shopped too often without success takes on an air of taint.”
But Claure said a decision is on the way. Sprint, he said, has “had sufficient conversations with several parties, and we are soon going to be making decisions.”