The market has allowed Comcast (CMCSA) the luxury of waiting to take out Sprint (S ). But the recent purchase of Alltel has increased outside interest in Sprint, as investors anticipate the company crossing over the event horizon of the private equity black hole. This sets up an interesting situation, as the strategic value of this asset to Cablecos could exceed the private valuations attached to it.
Cablecos need an independent wireless company to partner with as their voice deployments become commoditized. I argue that Sprint is vital to the long term survival of the Cablecos (see “Someone Tell the Cablecos Fixed Line is Dead“). Brian Roberts, CEO of Comcast, is on the record saying he has no interest in Sprint. But what the hell would you expect him to say? “Yes, we need an independent wireless carrier like Sprint to survive and hope to buy it one day!”.
Comcast or a consortium of Cablecos needs to move now in order to avoid having more bidders at the table.
Author is long Sprint and short Comcast