Verizon 'looking at giant cable merger'
Rumoured Verizon bid for cable operator Charter Communications will be test for Trump's industrial policy
Donald Trump’s industrial policy for the telecoms industry may face its first big test soon, following widespread rumours that Verizon is talking about combining with US cable operator Charter Communications.
Following earlier reports from the Wall Street Journal and Reuters, Bloomberg is now saying that Verizon CEO Lowell McAdam has approached Greg Maffei, CEO of Liberty Media, which controls Charter.
All reports cite “people familiar with the matter”, but name no names, and Verizon, Charter and Liberty are no commenting on the reports. Reuters said that no formal proposal has yet been made for a tie-up, citing “sources” on Thursday.
Charter last year became the second biggest cable operator in the US after taking over Time Warner Cable for $78 billion and Bright House Networks for $10.4 billion.
Earlier this year John Malone, chairman of Liberty, talked of a combination of cable operators buying T-Mobile US from Deutsche Telekom. He also said: “One could contemplate in a Trump administration Comcast and Charter could merge.”
According to JP Morgan, quoted by Reuters, Charter has a network potentially reaching 49 million US homes, including areas in California, Texas and Florida where Verizon sold its fixed-line business to Frontier Communications. Reuters also quotes McAdam telling Wall Street analysts last year that a Verizon-Charter deal would make “industrial sense”.
Bloomberg said that Verizon has looked at “more than 10 other options” aside from Charter, “including large media companies, network and cable operators and fibre-optic service providers”.
The financial news service also said that Bloomberg Intelligence analysts Matthew Kanterman and Joshua Yatskowitz believe that Verizon “would need an additional $16.9 billion of pre-tax synergies for the deal just to break even”.
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