Cable Has One Thing Verizon NeedsCable Has One Thing Verizon Needs

Speculation has officially run rampant with a report out by the New York Post that Verizon is considering a purchase of one of the largest cable companies in the US. There are many reasons why the very idea is ridiculous, but that won't stop the rumor mill from churning, particularly after UBS analyst John Hodulik stated late last year that a Trump Administration could make it easier for such a large-scale merger to pass regulatory muster.

Combatting the logic of a major cable acquisition (e.g., Comcast or Charter) is the fact that the cost would be ginormous. Plus, Verizon Communications Inc. (NYSE: VZ) would gain a bunch of fixed-line broadband customers it never wanted, and technology integration would be a nightmare.

Also, can you imagine Brian Roberts selling to Verizon?

I'd chalk the whole thing up to fanciful thinking, except for one thing. Verizon desperately needs last-mile wireline support for its future as a 5G wireless provider.

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Verizon is currently on a major fiber kick, but it can't compete with the installed last-mile infrastructure that the big cable companies already have in the ground. That means it's going to have to pay cablecos for capacity in local markets, and if it's going to fork over money anyway, maybe an acquisition looks like the smartest move. (See Analysts More Than Bullish on Comcast MVNO.)

I still say the idea of Verizon buying Comcast Corp. (Nasdaq: CMCSA, CMCSK) or Charter Communications Inc. ) is a long shot. But on the other hand, I didn't predict the MVNO agreement that Verizon made with the cable industry back in 2012. When it comes to telecom M&A, you just never know.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading