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April 2, 2006 10:04 pm
Dick Parsons, chairman and chief executive of Time Warner, the world’s biggest media company, has set his sights on establishing a strong presence in mobile phone services, either by purchasing wireless spectrum or via an acquisition.
Mr Parsons said in an interview with the FT that the media group’s Time Warner Cable division would focus on finding ways to add wireless telephony to its “triple-play” of video, telephony and internet services once the $18bn acquisition of cable operator Adelphia had been completed.
“The ultimate table has to be constructed with four legs, not three. The fourth leg will be wireless – how one solves the equation I don’t know,” Mr Parsons said.
Time Warner Cable, the second-largest cable operator in the US, is experiencing strong growth in subscribers and profits as more customers opt to buy its bundled services. However, investor concerns about a potential price war with telecoms operators offering the same range of services has lowered valuations in the sector.
Time Warner offers wireless services through a partnership with Sprint, a mobile phone operator, alongside other cable groups. But Mr Parsons said Time Warner might want a bigger stake in the fast-growing wireless business. He added: “The Sprint partnership is meaningful and a good way for us to participate in and learn about the wireless market.”
Acquisition opportunities are limited in the US mobile telecoms sector as the market is dominated by large players such as AT&T and Verizon, which are planning to integrate their mobile offerings with fixed-line telephone, internet and video services.
There has been some speculation that T-Mobile USA could be for sale, but its German parent has said it does not want to sell.
The completion of the Adelphia deal, which Time Warner has bought together with Comcast, will result in a spin-off of 16 per cent of Time Warner Cable. Regulatory approval is expected in coming months.
The Time Warner Cable shares could be used for further acquisitions in the cable sector or perhaps in the wireless sector.
Mr Parsons was speaking in an interview following his recent settlement with Carl Icahn, the activist shareholder who dropped his plans to seek control of Time Warner and oust Mr Parsons in exchange for an increase in share buybacks and a commitment to cost cuts by $1bn.
Mr Parsons said the cable business and AOL, the group’s internet business targeting the growing online advertising market, were both growth engines. “Cable and AOL are the two big drivers of our share price.” said Mr Parsons. “We need to be more persuasive in the market place about cable. The future is brighter than people think.”
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