Are Altice, other cable operators targeting T-Mobile?

[Jeff Causey]

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This past week at a conference sponsored by Goldman Sachs, the chairman of French telecom company Altice noted the cable operator needed to look into owning a mobile network. Many see Patrick Drahi’s comments as an indication that Altice may be interested in scooping up T-Mobile as part of a strategy to offer a “quad play” to consumers. Altice is not the only company interested in T-Mobile, or other wireless carriers, as an interesting M&A drama starts to unfold.

Financial analysts are starting to increase their price targets on companies like T-Mobile. BTIG analyst Walter Piecyk recently pushed his estimate for T-Mobile from $42 to $50 as he believes “T-Mobile could be a primary acquisition target of cable operators.”

Interest in wireless carrier and cable operator combos is increasing after the successful acquisition of DirecTV by AT&T. At the same time, the cable industry in experiencing a consolidation of its own, like the recent acquisition announcement of Time Warner by Charter. While companies like Altice may want to take a longer “wait and see” while they explore possibilities, the limited number of wireless carriers and cable consolidation is going to put pressure on them to move sooner rather than later.

Even as a company like Altice slowly starts to eye a carrier like T-Mobile, partly due to a belief that prices are too high, the wireless carriers are successfully improving their business model to increase revenues and thus, put upward pressure on their price. T-Mobile’s John Legere has suggested in the past, in connection with rumors of a Comcast acquisition, that it makes sense for wireless carriers and cable operators to join together. Even though the wireless carriers may be open to new business combinations, their success may prove to be a double-edged sword for any companies that hesitate.

If Altice is not ready to make a move for T-Mobile, other companies like Comcast may not wait around. For T-Mobile, a merger or acquisition with someone with a larger footprint in the U.S. would make more sense.

source: Fierce Wireless


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