Will Cable Companies Team Up With Sprint To Offer Wireless Services?

Cable and telecom execs are buzzing this morning about the possibility of a major deal involving Sprint Nextel that could help cable operators offer wireless services along with the standard “triple play” options: TV, wired broadband, and wired phone. Comcast and other operators are talking with Sprint about a buyout of struggling wireless firm Clearwire. Its shares are up more than 30% in mid-morning trading following a Bloomberg story about the possible deal. Here’s how it might work: Comcast and other operators — perhaps Time Warner Cable, Cox, Cablevision, and Bright House Networks — would make an investment in Sprint. The telecom company then would buy all or most of the 46% of Clearwire that it doesn’t already own. (It’s unclear whether that might include the 15% stake owned by Comcast, Time Warner Cable and Bright House Networks.) Presumably, cable companies then would offer Sprint’s wireless phone and broadband services.

Sprint could use some help: It has been in the red for 15 consecutive quarters. And if federal officials allow AT&T to buy T-Mobile, then Sprint could become an also-ran behind the newly merged company and Verizon. Clearwire’s also in trouble. It’s in the red and needs at least $600M to build and upgrade its speedy 4G network which is available to 130M households and has about 7.7M customers.

The big question is whether the deal would be worth the trouble for cable companies. Most have promised to return cash to shareholders — not to make big new investments. And some say that they don’t see much need to offer wireless. “The evidence so far is there is not a big market for the ‘quadruple play’,” Time Warner Cable’s Glenn Britt told analysts last month. BTIG analyst Walter Piecyk says this morning that he believes “Sprint will not be able to lure a large cable company into a strategic deal.” Credit Suisse’s Stefan Anninger says that cable investors likely would “view a deal with some skepticism.”

This article was printed from https://deadline.com/2011/08/will-cable-companies-team-up-with-sprint-to-offer-wireless-services-160451/