Verizon has been considering the acquisition of cable company Comcast, in a bid to match up to rival AT&T.
Now rumors are rife that the company may follow through with the plan. If Verizon were to purchase Comcast at its current market value, then the carrier would have to shell out a whopping $173 billion.
This acquisition - if it bears fruition - will aid Verizon in expanding its reach in the wireless space.
What fueled the rumors of the Comcast acquisition by the U.S. carrier were assertions by the company's CEO that it was eyeing an investment in cable.
Verizon Buying Comcast: What Propelled Rumors
Lowell McAdam, the CEO of Verizon, shared with some friends at the Consumer electronics Show 2017 (CES 2017) that he wanted to invest in cable.
Moreover, a source familiar with the matter has revealed that the company needed cable TV support for its 5G technology. The source also noted that Verizon was eyeing either Comcast or Charter.
Verizon 5G
Verizon works on 4G networks and is gearing up to launch a new data service range, catering full time to phones and TVs.
The company, therefore, is heavily investing in 5G networks which will run on cables to offer more stable connectivity and security for consumers.
Analysts in Wall Street have already hinted towards a huge merger with a cable company. McAdam is of the view that a tie-up between Verizon and a cable company "makes industrial sense." This statement came just three days prior to his revelations to associates at the CES 2017.
If Verizon acquires Charter, it would mirror the deal made between John Malone and AT&T, where Malone sold TCI Communications to the carrier.
AT&T has just acquired DirecTV and Time Warner. The latter has been bought for $103 billion in cash and stock by the carrier. Verizon, on the other hand, had sold a part of the FiOS network bundle to Frontier Communications to accommodate a cable TV merger.
Since Verizon cannot look to capture both FiOS and cable markets, it has set its focus on cable and looks headed towards market dominance in this sector. Given the current economic scenario, Charter may be the best buy for Verizon, as the market value for the same is $83 billion less than half of that of Comcast.
Verizon has not released any official statement on the supposed acquisition of Comcast.
Photo: Mike Mozart | Flickr
