A merger between top wireless company Verizon and No. 2 cable operator Charter is unlikely but possible, while a Verizon-Comcast merger would be too hard to push past regulators, said JPMorgan analyst Philip Cusick in a note to investors Monday.
"We believe a combination of Verizon and Charter is feasible but difficult on the financials, but Comcast's overall size and NBC ownership make a deal with Verizon a nonstarter as the regulatory review process would likely be quite difficult," Cusick wrote Monday in a research report focused on possible telecom industry mergers.
Amid the backdrop of a Trump administration that would figuratively approve previously unimaginable mergers, the idea of Verizon buying either Comcast or Charter Communications got put in the ear of the telecom industry back in November, when UBS analyst John Hodulik first seeded the concept in an investor note.
The idea picked up a little steam last week, when the New York Post reported that Verizon CEO Lowell McAdam is seriously considering buying one of the two biggest cable companies in order to support his wireless giant’s 5G buildout.
Cusick didn’t actually let all the air out of the balloon, noting that the limited potential of MVNO deals won’t be enough for wireless and cable operators not to explore deeper levels of partnership.
"We don't believe that an MVNO structure will allow cable to be successful in wireless over time," Cusick said. "Cable's wireless business would eventually grow to a point where Verizon views them as a threat."