T-Mobile announced it is acquiring Layer3, an IPTV over builder. While Layer3 is small in terms of its present subscriber footprint, the deal is likely to be watched closely by cable industry management teams, according to Barclays analyst Kannan Venkateshwar.

“The founding members of Layer3 have deep knowledge of the cable industry (Jeff Binder, CEO comes from Motorola, Dave Fellows was CTO of Comcast, Lindsay Gardner was at a leading media company) and therefore are intimately aware of the industry dynamics,” Venkateshwar. said. “This move by T-Mobile is, in our opinion, another data point highlighting the growing convergence of infrastructure and services.”

While scaling a combined TMUS/Layer3 offering could take time, Venkateshwar believes this deal further adds to the sources of pressure his firm highlighted in their recent downgrade of the cable sector, like potential greater completion in the coming quarters from virtual MVPD products on the video side and wireless on the broadband side.

December 14, 2017