The thinking had been that the SpectrumCo joint venture -- Bright House Networks , Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cox Communications Inc. and Time Warner Cable Inc. (NYSE: TWC) -- was in a position to use its Advanced Wireless Services (AWS) spectrum as a bargaining chip, selling spectrum to T-Mobile in exchange for a small equity stake and great wholesale rates, BTIG Research analyst Walter Piecyk tells Light Reading Cable. (See SpectrumCo Gets Licenses .)
In that scenario, the MSOs wouldn't have to spend capital dollars while still gaining the benefit of "owner's economics," he says.
But that opportunity could be gone. AT&T might find cable's AWS spectrum attractive, but it isn't about to give cable a break on wholesale rates.
That would leave Comcast, TW Cable and Bright House reliant on Clearwire LLC (Nasdaq: CLWR), in which they're each part owners. (Cox isn't.) "As a spectrum owner, it's a positive for them [cable], but on the other hand ...they're more in bed with Clearwire, which is a company that needs capital to build out a competitive wireless service," Piecyk says.
Will cable 'Sprint' to wireless?
Although the AT&T/T-Mobile deal may cause cable operators to reassess their mobile strategies, most analysts don't think MSOs will make a knee-jerk reaction and try to buy Sprint Corp. (NYSE: S).
The combination would be "a bigger competitive threat [to cable], but not catastrophic, necessarily," says Karen Brown, senior director of industry intelligence for One Touch Intelligence . AT&T, she notes, will have a bigger customer base for services that bundle wireless with U-verse, but it's still to be determined if those bundles are giving AT&T a more compelling product. "That's still a question mark in a lot of ways," she says.
Among MSOs, Cox probably has the most exposure against a larger head-to-head wireless competitor, she adds. But with AT&T likely to need a year to close the deal, Cox would have some time to get more wireless markets rolled out.
Cable may be gun-shy about pulling the trigger on a deal the size of Sprint, anyway. That's especially true of Comcast, which has been rumored to have eyes for Sprint in recent years but is kind of busy with NBCUniversal LLC .
"I don't see how a one further combination of companies really is going to be the catalyst for a big cable move," says Ian Olgierson, a senior analyst at SNL Kagan , noting that cable MSOs have had ample opportunities to pursue big wireless plays and, short of what Cox is doing now, have ended up pulling back on the reins. (See MSOs Pivoting Away From Sprint JV, Cox Wireless Preps for New England Launch and What's Next for Cox Wireless? )
But having T-Mobile off the table reduces cable's alternatives, meaning that some of the majors could be faced with plunking more cash into Clearwire/Sprint or somehow going it alone. "It definitely reduces their options," Heavy Reading Senior Analyst Alan Breznick says of the deal.
For more on the AT&T/T-Mobile deal, see:
- AT&T/T-Mobile: Riddled With Regulatory Risk
- DT's Shares Rocket on AT&T Deal
- What Happens to Sprint After AT&T/T-Mobile Merger?
- AT&T to Buy T-Mobile USA for $39B
— Jeff Baumgartner, Site Editor, Light Reading Cable