Cable & Wireless in 2017

Cable and wireless have been flirting over the past few years, whether it’s Verizon’s spectrum deal with the major cable MSOs, or cable companies’ experiment with wireless services. It looks like the 2 might get even closer in 2017. Earlier this month, Liberty Media chmn John Maloneaddressed the possibility of a major cable-wireless merger. “Maybe the three major cable companies get together and buy T-Mobile,” Malone said during LionsGate Entertainment’s investor conference. Interestingly, T-Mobile USA CEO John Legere, predicted in a recent blog post that this year, “big cable will unleash their assault on wireless through their MVNO deals” and that T-Mobile will say “No” to MVNO deals with cable companies. Why not? Because “an MVNO strategy is just not good enough…” he said. Legere’s other prediction: the majority of TV viewing will be on mobile by the end of the year. “Millennials are leading the way here, and the rest of the universe will catch up to them eventually,” he said. T-Mobile has been considered by numerous analysts as a takeover target for cable players including Altice, which acquired Cablevision, Comcast and Charter. While T-Mobile’s not that into cable, at least for now, Verizon might look to start a relationship. The telco’s CEO Lowell McAdam reportedly told friends at CES in January that he is interested in acquiring a cable company. UBS analyst John Hodulik first predicted the possibility of such a deal in a research note in November. “We have long believed that secular changes in technology and usage would lead to the convergence of the cable and wireless industries… Densification of wireless networks required to meet the needs of video-centric subscribers increases synergies of cable-wireless combinations and provides the springboard for 5G-based services,” he wrote. The major cable companies remained upbeat about the future of their MVNO businesses. During the UBS investor conference in Dec, Comcast CFO Mike Cavanaghsaid “we’re optimistic that it can work for us against the goals that we have for that” despite some concerns about whether MVNO arrangements would work for cable companies. Charter chmn/CEO Tom Rutledgeacknowledged potential limitations of MVNO deals. While Charter has exercised its MVNO option, there’s no immediate need for an MVNO product, Rutledge said during the same conference. But Charter, like Comcast, is exploring 5G, the next-gen wireless technology capable of gigabit speeds. With some of its biggest cable customers experimenting wireless offerings, Arris has eyed mobile as well. Speaking at a Needam investor meeting this month, CFO David Potts said as the company seeks growth “it’s possible that we could get into adjacent markets” such as wireless.