Breakingviews

Altice’s $9 bln U.S. foray shows controlled ambition

May 20, 2015

Patrick Drahi’s telecoms group is paying 10.1 times EBITDA to enter the U.S. cable market. But cost-cutting should reduce the multiple, and it could be a springboard for further consolidation. It’s a more conservative step than another mooted deal: a tilt at Time Warner Cable.

Verizon’s dumb pipes no smarter with $4.4 bln AOL

May 12, 2015

Seeking refuge from a vicious wireless war, the telecom carrier is buying the owner of the Huffington Post and old internet dial-up customers. The video ad tech business may be the prize, but it faces threats from Google and others. This is just another silly deal involving AOL.

Nokia will struggle to cut through Alcatel tangle

April 14, 2015

An all-stock takeover by the Finnish company would create a roughly 40 bln euro telecoms equipment giant. Nokia investors are understandably sceptical. A deal would mean another big restructuring and stretch the buyer’s industrial expertise. The French connection adds complexity.

Charter deal may not be final word on Bright House

March 31, 2015

The $10.4 bln acquisition, contingent on Comcast buying Time Warner Cable, suggests some confidence those rivals will get approval. If not, however, the U.S. cable puzzle could realign. Charter again might chase Time Warner Cable, which actually has first dibs on Bright House.

ZTE’s turnaround not as impressive up close

March 26, 2015

The Chinese telco equipment maker’s earnings almost doubled in 2014 – an improvement on the losses it was making three years ago. Yet revenue increased just 8 percent. ZTE is banking on smartphones and wearables to drive growth, but users don’t yet seem to be taking the bait.

French telco buyout shows dealmaker in a hurry

March 2, 2015

Vivendi is selling its residual 20 pct in Numericable-SFR to the mobile operator itself and parent Altice for 3.9 bln euros. This helps Altice’s billionaire boss Patrick Drahi prepare for a follow-on deal with Bouygues. It’s harder to see why Vivendi would accept a big markdown.

Time Warner Cable’s deal risk goes down to wire

February 20, 2015

A $45 bln sale to larger rival Comcast hangs in regulatory balance. Time Warner Cable’s stock price implies a 40 pct chance of collapse. A Breakingviews calculator shows how longer odds of success might hurt investors. The lack of a break fee would add insult to injury.

Small print debases $41 bln U.S. spectrum sale

February 3, 2015

The biggest bandwidth auction in years raised about twice as much as expected for Uncle Sam. But a 25 pct “small business” discount claimed by Dish Network is helping the $33 bln pay-TV company add to its unused stockpile and outbid rival operators that badly need capacity.

More than Slim odds America Movil buys T-Mobile

December 22, 2014

Carlos Slim’s telecoms empire needs to reduce its dependence on Mexico. The fourth U.S. wireless carrier is cheap, parent Deutsche Telekom doesn’t want it and there’s strategic logic to a deal. The increasingly frightful competition in U.S. telecoms may be a sticking point.

European telecoms will dial up more deals

December 16, 2014

Investors have brightened as M&A has swept the sector. Thanks to BT, Britain is up next. More mergers could follow in France, Italy and Belgium. What’s not to like? Well, windfalls from big cross-border deals looks distant and valuations already price in most of the good news.