Despite Comcast saying WiMax is not a focus and there is nothing in the acquisition pipeline, Citigroup analysts are considering the contrary. In a recent report, Citi telecom analysts suggest a 40% chance the cable player would acquire a wireless company within 12 months.
T-Mobile and Sprint Nextel are possible targets, but Sprint is the more likely candidate because it has WiMax spectrum, a national Internet Protocol setup and a sales force, the report states. WiMax is similar to WiFi, which offers a high-speed wireless Internet connection in common places such as cafes, but could travel farther.
A Comcast representative said Tuesday that WiMax was not a focus. John Alchin, co-cfo, said during a September conference that no acquisitions are in the pipeline or being contemplated.
“While Comcast management denied it was contemplating any sort of M&A during most of 2006, the commentary subtly changed during the third quarter conference call [Oct. 26], when management said it simply didn’t comment on M&A,” the analysts stated. “All this raises the possibility, however slight, that something major may be in the works.”
Comcast could have to pay $70 billion for Sprint Nextel. Though a deal seems a stretch, the analysts wrote, it could happen if Comcast gets a lower price, increases its leverage and incorporates cash from other companies. Comcast could have to issue $30 billion in equity to support the acquisition.
Others are watching Sprint Nextel, which pledged about $3 billion to WiMax in coming years, and Craig McCaw’s Clearwire, which has $900 million in backing from Motorola, Motorola Ventures and Intel Capital (CFW, 11/13).