U.S. cable operator Charter Communications Inc. announced on Sunday that it shares no interest in investing in Sprint. As a consequence, the U.S. wireless carrier meets another dead end in its mission to mobilize an urgent merger as soon as possible. Therefore, the majority owner, SoftBank Group Corp, has to find another solution.
Charter Refused to Give in to SoftBank’s Request of an Urgent Merger
The merger between Sprint Corp and Charter Communications Corp would have the potential to create a powerful competitor in the telecommunications market. Together they would be able to offer a comprehensive service package for clients that contains both mobile phone and internet products. On top of that, the result of the merger would have a strong foundation on which to develop the much coveted 5G wireless technology.
For the moment, Charter owns a market cap valued at $101 billion and another source of $60 billion in debt. This made the company a potential partner with enough resources to support and build on a Sprint buyout. However, the short answer coming from Charter might have put an end for good on such an opportunity.
“We understand why a deal is attractive for SoftBank, but Charter has no interest in acquiring Sprint.”
SoftBanks Is Considering T-Mobile US Inc as Another Suitable Partner
On the other hand, SoftBank Chief Executive Masayoshi Son turned to another company for an urgent merger. This time, the target is T-Mobile US Inc which Germany’s Deutsche Telecom AG controls as well. It is possible that the two parties have already initiated negotiation talks earlier this year.
At the moment, Sprint’s market capitalization reached as low as $32.8 billion with a similar amount of debt. A merger with Charter where SoftBank keeps its majority control would cause other tens of billions of dollars in debt. As a consequence, SoftBank would have no other choice than to tap into some of its other assets to stabilize the merger. This could include a 29.5% stake in Alibaba Group Holding Ltd.
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