While some analysts have poured cold water on a speculative acquisition of No. 2 U.S. cable operator Charter Communications by No. 1 wireless company Verizon, the company that has majority control over the MSO isn’t too keen on the deal either, at least not publicly.
“The market around broadband is fundamentally more attractive than wireless,” Greg Maffei, CEO of Liberty Broadband and other companies existing within John Malone’s Denver-based Liberty empire, speaking in a fourth-quarter earnings call with analysts earlier this week.
“Our currency is going to get more valuable, not less,” Maffei added.
The comments represented input from Charter’s backers on the issue of a rumored Verizon purchase.
In January, The Wall Street Journal reported that Verizon’s top executives are exploring a potential merger—news that has sent investors scrambling for stock in Charter. Indeed, the MSO’s stock rose more than 6% to $330 per share in trading immediately following the release of the WSJ’s article.
According to the WSJ, Verizon CEO Lowell McAdam has approached Charter to discuss a possible merger, and has formed an advisory team to look into the potential transaction. According to the report, it’s unclear whether Charter CEO Tom Rutledge would be open to the deal—Verizon and Charter officials declined to comment on the report.
While merging with Charter would, to at least some degree, take care of Verizon’s cable competition and capacity problems, analysts said it wouldn’t benefit the cable company nearly as much.
“Verizon has much less capacity than their main wireless competitors, and owning Charter would help them close the gap in 36% of the country,” New Street Research analyst Jonathan Chaplin said. “Cable companies will enter the wireless market this year, and by acquiring Charter, Verizon eliminates a potential competitor in the same 36% of the country.”