There’s no denying that virtually all the telecom companies aim to grow bigger. Some are bent on achieving this idea. Barely few days after the proposed Comcast plan to purchase Verizon went viral, recent reports have it that Sprint, Charter, and T-Mobile may merge to become a one telecom giant.
According to the sources that disclosed the information to Reuters, the Japanese telco, SoftBank is making financial arrangements to purchase Charter and merge it with their current Sprint. The deal would possibly worth more than $100 billion, and will make Charter-Sprint a giant telecom name that offers wireless services, home internet, and cable TV.
Sprint speaks on the proposed merger
During a conference call to analyze the recent earnings by Sprint, the CEO, Marcelo Claure stated that the information about the future of Sprint would be disclosed soon. Claure also said that the firm have many options and have discussed with distinct parties.
Charter debunks rumor
The management of Charter has debunked the rumor that the firm may buy Sprint. However, the rumored deal will not be at the level of Charter’s management, rather will involve the right owners.
Currently, SoftBank owns a significant share in Sprint. A possible merger may cause SoftBank to purchase more shares of Sprint, shoot in cash and increase debt to buy Charter before putting the two firms under the control of SoftBank.
Aftermaths of the possible merger
After Comcast, Charter stands tall as the second biggest cable provider in the country, but it’s facing many challenges with its expansion into new regions. Sprint is the lowest network provider with a network objectivity that doesn’t feel right. However, it offers many spectrum licenses that are not apt for receiving signals indoors but works best for high-speed short-distance links. And this is necessary for a wireless internet home setting. Apparently, internet providers prefer wireless signals for connectivity even to the last mile, and Charter-Sprint merger would suffice for this.
While the merger seems to be a good idea, there are possible financial dangers that may come up. Currently, Charter and Sprint are being leveraged heavily including an outstanding debt of $60 billion by Charter. If SoftBank takes over, the merged company will be leveraged heavily too.
Although things might work out, the financing may not come easily
Since Sprint is known for the cheap national wireless server, it can make the merger offer cheap wireless plans for companies. And this would be better than a Sprint-T-Mobile merger. If Charter and Sprint can come up with the wireless home internet, it will be a great improvement in the broadband niche, helping to increase the rate of TV streaming services as an excellent alternative to the standard cable.
On the other hand, the merger could make Sprint turn into a steady wireless company that enhances the present services offered by Charter.