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Update: SoftBank is said to plan making direct offer for Charter

Monday, July 31, 2017 - 14:52

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Masayoshi Son plans to use SoftBank Group Corp in a direct bid for Charter Communications Inc after an earlier merger proposal by its US wireless unit was rejected, a person familiar with the matter said.

[NEW YORK] Masayoshi Son plans to use SoftBank Group Corp in a direct bid for Charter Communications Inc after an earlier merger proposal by its US wireless unit was rejected, a person familiar with the matter said.

Mr Son plans to make the offer this week, the person said, asking not to be identified ahead of a public announcement. The plan isn't complete and could change, the person said. Charter spurned an offer to merge with Sprint Corp, which is controlled by SoftBank.

The plan by Mr Son, SoftBank's chairman, could reignite deal talks that had appeared to be dead late Sunday, when Charter said it wasn't interested in buying Sprint. The billionaire had previously proposed a deal that would create a new public company to absorb Sprint and Charter and combine them, people familiar with the matter said last week.

"We understand why a deal is attractive for SoftBank, but Charter has no interest in acquiring Sprint," Charter said in a statement before Bloomberg reported Mr Son's latest plans.

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Shares of SoftBank fell as much as 2.9 per cent in afternoon trade. The Tokyo-based company has a market value of about US$89 billion compared with US$101 billion for Stamford, Connecticut-based Charter. SoftBank declined to comment.

US cable and wireless carriers have been circling each other as more consumers watch video and access the internet on mobile devices. By combining, companies like Charter and Sprint could offer a full suite of telecommunications services to customers, from home broadband internet to wireless plans, and compete head-to-head with the packages sold by phone giants AT&T Inc and Verizon Communications Inc.

Since the end of May, Charter and Comcast Corp had been in exclusive talks with Sprint over possible deals, including one that would allow the cable companies to resell wireless service under their own brands.

The exclusivity ended this week, and Charter has decided against a reselling deal with Sprint, according to another person familiar with the matter, who asked not to be identified discussing private information.

A combination of Sprint and Charter would put together the fourth-largest US wireless carrier with the No 2 US cable company. Sprint, based in Overland Park, Kansas, has a market value of almost US$33 billion and even more in long-term debt - putting pressure on Mr Son to make a deal as Sprint's losses mount and bond maturities approach.

Mr Son has also been considering merging Sprint with T-Mobile US Inc, the third-biggest US wireless carrier. Sprint has argued publicly that a merger with T-Mobile makes sense because it would create a bigger wireless carrier to take on larger competitors AT&T and Verizon. But a surge in the value of Sprint's wireless spectrum holdings persuaded executives to consider other deals, too, Bloomberg reported in April.

Charter has a separate pact with Comcast that could complicate a deal with Sprint. The cable companies agreed in May to work together on any transaction with a wireless company in the next year. That means if Charter changes its mind and decides to merge with Sprint, Comcast would have a say in the matter.

Charter has long-term debt of more than US$63 billion. Its revenue totaled US$40.8 billion in the past year.

Cable billionaire John Malone holds a 21 per cent stake in Charter through his Liberty Broadband Corp. Mr Son has also met with Mr Malone and Warren Buffett about making potential investments in Sprint, a person familiar with the matter said earlier this month.

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