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from Breakingviews:

Samsung software bet rests on future beyond phones

By Robyn Mak 

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Samsung may be the world’s largest smartphone vendor, but the electronics giant is looking beyond phones. The company has launched the first smartphone that runs on its own operating system. Samsung is unlikely to challenge Google’s lead in handsets any time soon. But it may have more success with software that can control televisions, appliances and even cars.

At first glance, Samsung’s Tizen operating system looks like a Google insurance policy. The search giant’s Android software runs on 79 percent of the world’s smartphones, including Samsung’s, according to Canalys. Though Android is free to use, conditions set by Google mean less control and flexibility for hardware makers. A lack of a credible alternative also means the Korean electronics giant and its peers have less negotiating leverage.

But Tizen is unlikely to challenge Google’s lead in smartphones. Android phones are popular for two reasons: they’re cheaper on average and they offer users access to over one million apps. Samsung has yet to reveal the price for the Tizen phone, but the decision to launch in Russia will make it difficult to convince developers to make apps for a new platform with a relatively small market.

from Breakingviews:

Korean chat app sends mixed valuation messages

By Robyn Mak 

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

What’s the value of mobile chat apps? Investors have been scratching their heads about the topic ever since Facebook slapped a $19 billion price tag on WhatsApp earlier this year. The recent backdoor listing of South Korea’s Kakao offers a new data point. But its user metrics and revenue numbers still offer a mixed message on valuation.

from Breakingviews:

AT&T puts shareholders on hold for DirecTV

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AT&T is putting its shareholders on hold to buy DirecTV. Its $67 billion acquisition of the satellite TV operator announced on Sunday brings with it an unexpectedly robust $1.6 billion of cost savings. Even so, these don’t quite cover the cost of the premium. In any case, AT&T says it will use the money to roll out rural broadband service. Customers and regulators are getting the first call.

from Breakingviews:

FCC needs thick skin to weather its moment in sun

By Daniel Indiviglio and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The U.S. Federal Communications Commission will need thick skin to weather its moment in the sun. The usually low-profile telecom watchdog is tackling flashy issues involving mergers, internet neutrality and wireless spectrum. Resolving them won’t be easy, given the agency’s mandate to spark competition while also promoting efficiency and consumer choice. Current commissioners seem up to the challenge.

from Breakingviews:

AT&T will struggle to justify $70 bln DirecTV bid

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AT&T will struggle to justify buying DirecTV for an enterprise value of some $70 billion. Going headlong into the satellite television business requires some heroic assumptions to make the offer financially worthwhile. To cover its cost of capital, for example, AT&T probably would need to wring more than $2 billion of savings from its target. This deal gives off a whiff of desperation.

from Breakingviews:

AT&T deal dialing emits a shaky signal

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AT&T’s deal dialing is emitting a shaky signal. First, it wanted T-Mobile US for more domestic subscribers. After regulators nixed the idea and Verizon cleaned up its wireless joint venture, AT&T pursued Vodafone for European growth. Now, amid U.S. pay-TV consolidation, DirecTV or Dish beckons at home. The rationale is questionable and suggests the broader strategy is wayward.

from Felix Salmon:

You won’t have broadband competition without regulation

Tyler Cowen isn’t worried about the cable companies’ broadband monopoly. His argument, in a nutshell: if you can’t afford broadband, that’s not the end of the world: you can always go to the public library, or order DVDs by mail from Netflix. And if the cable companies’ broadband price is very high, then that just increases the amount of money that alternative broadband providers can potentially make in this “extremely dynamic market sector”. Indeed, he says, if regulators were to force cable companies to decrease their prices, then that would only serve to decrease the amount of money that a competitor could make, and thereby lengthen the amount of time it will take “to reach a more competitive equilibrium”.

The first big thing that Cowen misses here is television. Cowen knows that there’s more to broadband than watching movies on Netflix, but what he doesn’t really grok is that there’s more to Netflix than watching movies on Netflix. Netflix has moved away from the movies model (which was a constraint of the DVDs-by-mail model) to a TV model. And that makes sense, because Americans really love their TV. They love it so much that cable-TV penetration is still substantially higher than broadband penetration. As a result, any new broadband company will not be competing against the standalone cost of broadband from the cable operators: instead, they will be competing against the marginal extra cost of broadband from the cable company, for people who already have — and won’t give up — their cable TV.

from Breakingviews:

Vivendi’s SFR is top target for French cable king

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

France’s cable king promised investors a slew of deals when he floated Altice, his investment vehicle. The biggest and best would be Vivendi’s mobile operator SFR.

from Felix Salmon:

Monopolizing bandwidth

Paul Krugman makes a simple but powerful point about Comcast's acquisition of Time Warner Cable:

One puzzle about recent U.S. experience has been the disconnect between profits and investment. Profits are at a record high as a share of G.D.P., yet corporations aren’t reinvesting their returns in their businesses. Instead, they’re buying back shares, or accumulating huge piles of cash. This is exactly what you’d expect to see if a lot of those record profits represent monopoly rents.

from Breakingviews:

Standalone Vodafone starts to look healthier

By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The standalone Vodafone is starting to look healthier. The mobile telecom operator will become dramatically smaller after it quits the United States and returns $84 billion to its shareholders. Elsewhere, its sales have been falling faster and faster. Now it looks like the worst is past and Vodafone hopes to ride a boom in mobile data. Yet for investors, the top question is what part the group will play in future M&A.

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