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Will AT&T’s Merger Deal with Time Warner Close in October?

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Merger deal

According to a report from FierceCable on October 11, 2017, AT&T’s (T) merger deal with Time Warner (TWX) could close this month. Further, as per the same report, “Brazil is reportedly expected to approve the deal during a 10/18 regulatory meeting, if not sooner, and we believe the U.S. approval will follow in short order.”

Last year, AT&T announced that it had agreed to acquire Time Warner for $85.4 billion. AT&T has robust customer relationships over video, wireless, and the fixed broadband platform, while Time Warner has premium content assets. Thus, the AT&T-Time Warner merger would create a vertically integrated company with high-quality content and an established subscriber base that could help improve AT&T’s long-term earnings.

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Diversifying revenue streams

The above graph shows AT&T’s total revenue over the last five quarters. In 2Q17, AT&T generated total revenue of $39.8 billion as compared to $40.5 billion in 2Q16. The proposed acquisition of Time Warner has been considered another attempt by AT&T to pursue revenue growth outside its traditional US wireless business where competition has become more serious. Smaller competitors Sprint (S) and T-Mobile (TMUS) have stepped up competition with disruptive pricing techniques.

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