Charter Is Said Cool to SoftBank's Sprint Plan, Still Talking

(Bloomberg) -- Charter Communications Inc. is cool to Japanese billionaire Masayoshi Son's proposal to combine with his Sprint Corp., though talks remain active, according to a person familiar with the matter.

Son, who is Sprint Corp.'s chairman, proposed a cash and stock merger of his money-losing wireless company with Charter, people familiar with the matter said, asking not to be identified discussing private information. The idea called for the creation of a new publicly traded company that would combine Sprint and Charter and be controlled by Son's SoftBank, the people said.

That new combined company would then attempt to buy T-Mobile US Inc., according to one of the people.

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.

Exclusive Talks

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.

The closing of that window paved the way for Sprint to resume discussions with T-Mobile or other partners, people with knowledge of the matter told Bloomberg News earlier this week. The cable companies are interested in a reselling deal that would let them offer Sprint's wireless service under their own brands.

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

Revenue totaled $33.3 billion in the past 12 months. Son's SoftBank holds an 83 percent stake in the 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.

‘Methodical Way'

T-Mobile, which has outperformed Sprint in wireless subscriber gains and profits over the past few years, has maintained that it doesn't feel pressure to do a deal now that Sprint is talking to other potential partners. “We're interested in focusing on our business and doing things in a methodical way at our pace and at our schedule,” T-Mobile Chief Executive Officer John Legere said on a July 19 conference call.

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, located in Stamford, Connecticut, has a market value of more than $100 billion and long-term debt of more than $63 billion. Its revenue totaled $40.8 billion in the past year.

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

The Wall Street Journal reported on Son's pitch to Charter earlier Friday.

--With assistance from Pavel Alpeyev Chris Cooper Gerry Smith Scott Moritz and Kenneth Pringle

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum, John McCluskey