Sprint's Chairman Has Engaged Warren Buffett About Investment -- 2nd Update
15 July 2017 - 8:42AM
Dow Jones News
By Ryan Knutson and Shalini Ramachandran
Sprint Corp. Chairman Masayoshi Son has engaged has engaged two
of America's richest men, billionaire investor Warren Buffett and
cable mogul John Malone, about investing in the embattled 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
Charter Communications Inc.'s biggest investor, 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 deal to help the money-losing company which is saddled
with more than $32 billion in debt. 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.
Sprint shares gained 4% Friday after The Wall Street Journal
reported the discussions, ending the day with a market
capitalization of about $34 billion.
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.
Messrs. Buffett and Malone have a history together and both are
known for investing in companies that others view as distressed.
Sprint, which has been unprofitable since Mr. Son took control of
it in 2013 and fallen to No. 4 in terms of U.S. subscribers, fits
that bill.
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.
Mr. Buffett has traditionally avoided technology companies,
though Berkshire owns a stake in Apple Inc. and until recently held
a large stake in Verizon. One cable industry veteran likened a
potential Buffett investment in cable's wireless efforts as a vote
of confidence similar to what cable experienced when Microsoft
Corp. plunged $1 billion into Comcast in 1997 to juice high-speed
broadband deployment.
An investment 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.
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 18:27 ET (22:27 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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