Sprint's Chairman Has Engaged Warren Buffett About Investment -- Update
July 14 2017 - 2:59PM
Dow Jones News
By Ryan Knutson and Shalini Ramachandran
Sprint Corp. Chairman Masayoshi Son has engaged Warren Buffett
and cable mogul John Malone in discussions about participating in a
deal with the wireless company, people familiar with the situation
say.
The Japanese billionaire met separately with the Berkshire
Hathaway Inc. boss and Mr. Malone, whose Liberty Broadband Corp. is
one of Charter Communications Corp.'s biggest investors, this week
at an annual gathering of CEOs in Sun Valley, Idaho, the people
said.
The contours of the deal the parties are discussing are unclear.
The talks are at an early stage and may not result in an agreement,
the people said, but one possibility would see Berkshire put more
than $10 billion into a transaction.
Mr. Son, who controls more than 80% of Sprint, has been
exploring a merger or stake sale to help the money-losing company
compete with its bigger rivals. In recent months, Sprint has also
held merger talks with rival T-Mobile US Inc. and discussed a
reseller agreement with cable providers, people familiar with the
matter have said.
Since late May, Charter and Comcast Corp. have been in exclusive
talks with Sprint about buying a stake in the wireless carrier or
negotiating a favorable wholesale agreement that would allow them
to resell wireless service under their own cable brands. The
exclusivity window only lasts a few more weeks, people familiar
with the matter have said.
Mr. Malone has been scouting for a deal that would bolster
Charter's efforts to add wireless service to its cable TV and
internet businesses, people familiar with the matter say.
Charter and Comcast struck a wireless partnership earlier this
year, agreeing to seek the other's consent on any wireless deal.
Charter would need Comcast's approval to reach any such deal with
Sprint or Mr. Buffett, but Mr. Malone's Liberty Broadband Corp.
wouldn't if it were to act independently.
Comcast CEO Brian Roberts has been wary of buying into Sprint,
people familiar with the matter have said. Comcast has more
diversified holdings in entertainment and theme parks, and views
the wireless business as an industry under great price competition.
It has instead opted for a more cautious approach, using a reseller
deal with Verizon Communications Inc. to add wireless to its bundle
of services for Comcast customers.
Mr. Buffett has invested in some of Mr. Malone's companies in
the past, including Charter and international cable operator
Liberty Global PLC. Berkshire Hathaway currently holds 3.5% of
Class A shares in Charter and 8.5% of Class A shares in Liberty
Global, making it Liberty Global's largest Class A shareholder.
Berkshire held more than $90 billion in cash at the end of the
first quarter, and Mr. Buffett has been on the hunt for deals.
Berkshire's utility unit agreed earlier this month to buy bankrupt
Energy Future Holdings Corp.'s Oncor for around $18 billion,
including debt.
An investment from Berkshire, which has purchased a large stake
in Apple Inc. but traditionally avoided technology companies, would
help Sprint invest in its network and afford price cuts to drive
customer growth.
But it could complicate merger talks with T-Mobile and its
parent company, Deutsche Telekom AG. Those talks, which restarted
this year, were put on hold while Sprint and its parent company,
Japan-based SoftBank Group Corp., agreed to the exclusive talks
with Charter and Comcast.
Sprint has a market capitalization of about $32.5 billion and
more than $30 billion of long-term debt. Shares of Sprint gained 4%
to $8.55 in Friday afternoon trading.
Dana Mattioli and Nicole Friedman contributed to this
article
Write to Ryan Knutson at ryan.knutson@wsj.com and Shalini
Ramachandran at shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
July 14, 2017 14:44 ET (18:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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