Altice strikes deal with SoftBank’s Sprint

Bloomberg

Altice USA struck a deal with Sprint Corp. that will allow the cable operator to sell wireless service using Sprint’s network.
As part of the agreement, Sprint will use Altice’s broadband infrastructure to strengthen its nationwide wireless network, according to a statement from both companies that didn’t disclose financial terms. Talks between Sprint’s majority owner, SoftBank Group Corp, to combine the carrier with T-Mobile US Inc collapsed after months of negotiations.
The deal between Altice and Sprint marks the latest example of a US cable operator entering the wireless business to compete with giants like Verizon Communications Inc and AT&T Inc.
Comcast Corp, the nation’s largest cable operator, recently started selling cellular service using Verizon’s network. Charter Communications Inc., the No. 2 cable operator, plans to enter the wireless business next year.
Offering cellphone service, in addition to TV and high-speed internet, could help cable companies keep customers as many drop pay-TV for cheaper online options.
“As content and connectivity continue to converge, we believe this approach will be a model for future strategic arrangements across multiple industries including cable, tech and others,” Sprint Chief Executive Officer Marcelo Claure said. He had said in May that the company was working on a mobile virtual network operator pilot programme with a partner he didn’t name.
Altice has 4.9 million customers, including many around the New York City suburbs. It acquired Cablevision last year to become the fourth-biggest US cable operator. Altice hasn’t determined yet when it will enter the wireless market, according to a company spokeswoman. The Altice wireless service could start in the second half of 2018, as ramping up the operation will require time and investment, said Thomas Coudry, an analyst at Bryan Garnier.
The deal “makes sense in our opinion, as required capital intensity is limited, and we believe Altice USA wants to keep its M&A firepower for cable operations,” Coudry said in a note to clients.
Altice isn’t new to the wireless industry. It is a subsidiary of Altice NV, which offers cellular service in several countries, including France, Portugal and Israel.
The company plans to double its US cable presence in the next five years after assembling the unit through $26 billion in acquisitions, including purchases of Cablevision Systems and Suddenlink.

Masayoshi Son defends ending Sprint merger
Bloomberg

For Masayoshi Son, it all came down to keeping a tight grip on Sprint Corp. In his first public comments since ending talks to merge with T-Mobile US Inc., the billionaire chief executive officer of SoftBank Group Corp. defended his decision to walk away from a deal that had the potential to transform his two telecommunications companies.
“Why did we stop merger negotiations? Basically, we didn’t think we should be agreeing to a deal that would result in our loss of control,” Son, 60, said at a briefing after announcing quarterly earnings on Monday.
“There was just a line we couldn’t cross. And that’s how we arrived at the conclusion.”
A wireless telecommunications network will be critical to support investments that Son plans to make via the Vision Fund, a $100 billion investment giant that he’s creating with the Saudis and other backers to speed up investments in technology startups abroad. “Having US telecom infrastructure is essential and we need to keep control,” he said.
Son sought to assuage any concerns by investors that Sprint will be a drag on SoftBank’s finances. He has relied on a steady flow of cash from Japanese wireless and telecom operations to fund new endeavours, while Sprint has struggled to return to profit. About half of Sprint’s $38 billion in debt and obligations is coming due over the next four years and the Overland Park, Kansas-based company is also facing potentially costly investments into next-generation wireless technology.