Recent reports in the mobile networks industry claim that Sprint Corp (NYSE:S) is currently in wireless partnership talks with Charter Communications and Comcast Corporation (NASDAQ:CMCSA).
Sources who spoke to Reuters revealed that Sprint decided to pause its merger Negotiations with T-Mobile US Inc (NASDAQ:TMUS) so as to pave way for the partnership talks with Charter Communications and Comcast. The partnership negotiations are expected to last two months and will span until the end of July. Comcast and Charter struck a deal a month ago in which they agreed that they would consult each other for the next one year when making partnerships in the wireless space. The new partnership talks with Sprint are of course under the influence of the Comcast-Charter deal.
“Talks of an MVNO agreement with Sprint are not surprising,”wrote Jefferies analysts in a client note.
Analysts highly optimistic about the partnership talks
Analyst Jonathan Chaplin of New Street Research estimates that the cost of synergies from the deal between Charter Communications, Sprint and Comcast will be anywhere between $35 billion to $40 billion. He also pointed out that the economic and strategic benefits of the deal will heavily outweigh the direct cost savings. Chaplin also stated that the move would be detrimental to the rival carriers.
The announcement of the partnership talks had a significant impact on the stock performance for the companies. Sprint shares were up by 3 percent on Tuesday while Comcast stock dropped by 1.2 percent. T-Mobile took the biggest hit with its shares dropping by 4.5 percent. Charter did not record significant changes to its stock.
Analysts at JPMorgan Chase & Co. (NYSE:JPM) stated that if the talks between the three firms were to go sideways, then Sprint would have a weaker negotiating position once it revives its merger talks with T-Mobile. Sources familiar with the dealings also stated that Comcast and Charter might consider jointly acquiring Sprint, though that would be highly unlikely. It will thus me a matter of days until the outcome of the partnership talks is revealed.
Sprint stock closed the latest trading session on Tuesday at$8.18 after a 2.12 percent gain from the value of the stock during the previous close.