Comcast (NASDAQ: CMCSA) is in talks with Deutsche Telekom about a possible acquisition of T-Mobile US (NYSE:TMUS), the German publication Manager Magazin reported, citing anonymous sources.
Deutsche Telekom is already in discussions with several other companies, including Dish Network (NASDAQ: DISH), about a T-Mobile purchase. Manager Magazin reported, however, that Comcast is a preferred acquisition partner, given its relative financial strength and ability to buy all shares in T-Mobile US in a complete takeover.
Neither Comcast nor Deutsche Telekom offered a comment on the report.
Investors appeared to react favorably to the news, with Deutsche Telekom shares rising 2.8 percent in Frankfurt following the report.
In a note to investors, Macquarie Securities' Kevin Smithen wrote that T-Mobile would benefit from incorporating Comcast's Wi-Fi infrastructure into its mobile video plans.
"We have been writing for months that Comcast was the best strategic partner for T-Mobile long-term, as we believe mobile video streaming will require substantial Wi-Fi offload in major markets," Smithen wrote. "Recent meetings with OTT infrastructure providers Akami Technologies and Limelight Networks confirmed our views on this. Licensed LTE spectrum is not a cost-efficient delivery mechanism for HD video if OTT usage really takes off in a few years."
Reports of the Comcast M&A discussions come after analysts said the company needs to "lay low" on the acquisitions front, having raised the ire of U.S. regulators amid its failed purchase of Time Warner Cable (NYSE: TWC).
Washington is "really annoyed with Comcast. Obviously, it's political," John Tinker, media analyst with the Maxim Group, told the Philadelphia Inquirer recently. "They are in the penalty box. The issue is how long they will stay in the penalty box."
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