Cox Communications is a target of potential takeovers for many years. The company has always rejected all takeover proposals, despite multiple attempts by different suitors.
Charter Communications Inc. announced today that Cox had agreed to acquire it for $34.5 billion.
What finally convinced Cox to buy a business after he had resisted it so much?
Expert Craig Moffett believes that the Cable Television Company’s Friday yield may be due to the changing dynamics in the wireless industry, and Charter’s mobile strategy.
Charter-Cox merger all about wireless
Craig Moffett believes that Charter and Cox’s merger has less to do with cable consolidation than it does about positioning the two companies for an increasingly wireless future.
The senior MoffettNathanson analysts in an interview today with CNBC noted that both Charter and Cox are described as mobile and broadband service providers, but mobile comes first.
The cable industry is embracing wireless technology to increase its revenue.
Broadband has been the main offering of cable operators for many years.
He added that the “mobile” is now the new frontier.
Cox has access to better wireless deals
Craig Moffett, on The Exchange’s “The Exchange”, argued that Charter’s agreement with Verizon may also have played a role in Cox’s choice.
Charter is a Mobile Virtual Network Operator, reselling VZ network access at better terms than Cox.
Cox can now take advantage of Charter’s better wireless deals, allowing it to strengthen its position in the market for mobile and broadband bundles.
Moffett says Cox understood that having a good relationship with Verizon is crucial if wireless bundles are to be the future of industry.
Charter’s merger with it will give them a more effective wireless strategy and position themselves to flourish in a mobile-centric market.
Charter-Cox merge is inspired by shifting industry priorities
Craig Moffett, a cable provider in the United States, said that while traditional cable television may still be a part of this equation cable providers are moving away from video services being their main business. This has been going on for many decades.
Mobile is the fastest growing area of growth, replacing broadband as the mainstay for profitability.
Cox decided to stop operating alone because it would be at a competitive disadvantage. While AT&T, Verizon and other competitors are expanding aggressively their bundles.
He added that a partnership allows it to have a dominant market position, without the need to develop a wireless infrastructure competitive with its competitors.
Bottom Line
Craig Moffett says that the Charter-Cox merge is all about strategy.
Cox, by partnering with Charter, gains access to more infrastructure and better wireless deals. It also has a stronger foothold on an industry that is constantly changing.
This merger is a sign that convergence of broadband and mobile has become the main driving force in the telecom industry.
This deal, if Charter and Cox successfully integrate their operations, could cement their position as key players in the future of the industry.
This article What caused Cox Communications to say “yes” after years of opposition? This post may be updated as new information becomes available
