October 25, 2016 —
AT&T’s purchase of Time Warner for $108 billion brings together titans from two different worlds: telecom and media. While Time Warner improves the carrier’s dividend, revenue and growth profile, this transaction is a diversification play meant to give AT&T subscribers access to premium video content over whatever screen happens to be in front of their eyes.
This transaction was not a surprise. On Oct. 6, we reported the Bloomberg News’ prediction that AT&T was ready to spend between on one or more media companies including AMC Networks, Discovery Channel or Time Warner. The price of the acquisition was higher than expected. The Bloomberg report guessed AT&T’s war chest was between “$2 billion and $50 billion.”
What does this mean for towers? To the degree that media mergers improve the carriers’ bottom lines, shoring up ARPUs, it is a good thing. Additionally, broadband video is going to call for increased network density. Good for small cells.
Additionally, Verizon Communications plans to broadcast 4K video into homes using 5G-style high-speed, fixed wireless technology.
But diversification goes both ways. At Goldman Sachs Communacopia 2016 in New York late in September, cable providers – Comcast and Charter Communications – announced they are getting into wireless as mobile virtual network operators.