Speculation builds on a Verizon-Charter tie-up, no offer made

Thu Jan 26, 2017 4:58pm EST
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By Anjali Athavaley and Liana B. Baker

(Reuters) - Verizon Communications Inc is interested in exploring a combination with U.S. cable company Charter Communication Inc as part of a long list of acquisition targets, but no proposal has been made for a tie-up between the two companies, sources told Reuters on Thursday.

Speculation over a combination of the companies underscores the pressure the nation's largest wireless carrier faces to do a deal in the wake of AT&T Inc's planned $85.4 billion takeover of Time Warner Inc. Verizon and other carriers also face a saturated smartphone market.

Verizon said in July that it struck a deal to buy Yahoo Inc's core internet properties, but the deal was cast into doubt after Yahoo disclosed data breaches last year.

"I think the market is predictably impatient and wants Verizon to do something yesterday," said Craig Moffett, an analyst at MoffettNathanson. "The market inevitably draws the comparison to AT&T that, for better or worse, has made its big strategic bet."

After rising as much as 10 percent and hitting a session high of $341.50 on the news, Charter shares eased and were trading up 6.5 percent at $330.59. Verizon shares were down 1.4 percent at $49.08.

Charter and Verizon declined to comment.

A Charter acquisition would signal that Verizon has a drastically different strategic vision than rival AT&T, which has sought to diversify away from the wireless business through its deal for Time Warner and earlier acquisition of satellite-TV provider DirecTV.

Instead, a deal for Charter would indicate Verizon is betting on infrastructure. On its earnings conference call with investors on Tuesday, Chief Financial Officer Matt Ellis said that 5G wireless technology was a focus for Verizon.   Continued...

The Verizon logo is seen on one of their retail stores in San Diego, California, U.S. April 21, 2016.  REUTERS/Mike Blake/File Photo