What's Driving Proposed AT&T- TWC Merger? - DirecTV

#1
FBR & Co says it's a defensive play driven by the following:
(1) greater regulatory pricing pressure that restricts management's ability to raise wholesale interconnection and business data service prices in the wireline segment,
(2) a constrained capex budget that limits AT&T's ability to roll fiber fast enough to address a competitively disadvantaged broadband product relative to cable,
(3) a strategic 5G wireless threat from cable, and
(4) higher programming costs.

Management hopes this expensive acquisition can help defend its wireline and wireless franchise value to a greater extent than it can organically. While we see significant regulatory scrutiny, it is hard to see how this deal could be blocked following approval (with remedies) of the Comcast/NBC deal.
Bottom line, we view this as modestly negative for AT&T because absent this deal management faces an even greater strategic threat to its core business.

Not widely reported:
U-verse connections declined a whopping 22.9% year over year as per AT&T's 3rdQ-2016 earnings report. http://www.att.com/Investor/Earnings/3q16/ib_final_3q16.pdf

Entire blog post + updates at:
http://community.comsoc.org/blogs/a...ime-warner-necessary-high-risk-defensive-play


This question, "What's Driving Proposed AT&T- TWC Merger?," is about DirecTV channels, programming, equipment, and sports.
 
Top