Mixed Feelings Over Comcast/T-Mobile


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Manager Magazin, a German news outlet, reported that Deutsche Telekom is in talks with Comcast about a possible sale of T-Mobile US, according to Reuters. (We’ll have to take their word for it because the whole article was in German.) Reuters notes that Comcast would be a better candidate as it’s financially stronger than Dish Network, and would be able to make an offer to buy all share in T-Mobile US. However, Kannan Venkateshwar of Barclays noted that they’re skeptical of a Comcast/T-Mobile deal. Venkateshwar thinks that because of the regulatory opposition over Time Warner Cable, any large deal with Comcast will be scrutinized heavily. Venkateshwar wrote, “It is only a matter of time before Comcast offers wireless data and voice. However, the company does not need to buy TMUS to achieve this, in our view. Comcast already has an MVNO agreement with VZ and Sprint and has one of the largest WiFi networks in the world. The wireless data and voice plans offered by cable providers are likely to be WiFi-first networks, in our view, which will have lower capital intensity.” Reuters mentioned that Deutsche Telekom is in talks with several parties about an acquisition, including Dish Network, but thinks Comcast is a more attractive buyer despite Venkateshwar concerns above.

Kevin Smithen at Macquarie Securities also believes Comcast is the best strategic partner for T-Mobile long term. “Based on recent meetings our colleagues have held with Deutsche Telekom management, we believe that Deutsche Telekom is more sold on the synergies created by fixed mobile convergence than by an improved mid-band spectrum position,” Smithen wrote. “As such, we believe Deutsche Telekom could retain a larger equity stake in Comcast or Newco than it would with Dish Network. As Deutsche Telekom holds the cards with T-Mobile, we think a deal with Comcast in the low to mid $40s, with a large stock component would be palatable for Deutsche Telekom.”

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