May 16, 2025 • 35 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
A key House committee on Friday failed to advance House Republicans’ massive tax-and-spending bill after hard-line conservatives bucked President Donald Trump and blocked the bill over cost concerns.
The House Budget Committee rejected the bill 21-16, with Republican Representatives Chip Roy, Ralph Norman, Josh Brecheen, and Andrew Clyde joining Democrats to vote against it. The four hardliners demanded deeper cuts to Medicaid and other government programs.
It’s incredibly rare for bills to fail at this step in the process, with the committee vote typically serving as a rubber-stamp to the bill before it moves to the House floor.
Negotiations will continue through the weekend, with the committee planning to meet again late Sunday night.
In deal news, Charter Communications Inc. has agreed to combine with closely held Cox Communications in a cash-and-stock deal that would unite two of the biggest US cable providers. The takeover values Cox at about $34.5 billion including debt, the companies said in a statement Friday, confirming an earlier Bloomberg News report. The deal includes about $12.6 billion of net debt and $21.9 billion in equity, the companies said. The combined company would be the top broadband operator in the US, and increase Charter’s subscriber base by more than 20%, according to Bloomberg Intelligence analyst Geetha Ranganathan. It also comes at a time when cable companies are facing increasing competition.
Today's show features:
- Bloomberg Balance of Power Co-Host Joe Mathieu
- Kabir Ahmed Shakir, Chief Financial Officer at Tata Communications and Bloomberg News Senior Editor Nina Trentmann
- Craig Moffett, Founding Partner of MoffettNathanson
- Katie Hubbard, EVP of Capital Markets for Walton Global
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Week,
Daily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Let's now go to Washington for the latest from the Capitol,
where a key House committee on Friday failed to advance
House Republicans massive tax and spending bill. This after hardline
conservatives bucked President Trump and block the bill over cost concerns.
We got Joe Matthew with us. He's co host of
Bloomberg at Balance of Power. He joins us from our
Washington DC Bureau. Joe Representatives Chip Roy, Ralph Norman, Josh Breacon,
(00:55):
Andrew Clyde joined Democrats to vote against this.
Speaker 3 (00:59):
What happens now, Well, that's a great question, and that's
the one we're all asking.
Speaker 4 (01:04):
This happened right around noontime. Tim. It's great to be
with you today, and you know you're going to hear
a lot.
Speaker 3 (01:09):
Of people speculate about the fate of this bill based
on this failure, and I won't try to do that
right now. What I will tell you is this is
not the way it's supposed to be done. This is
the easy part getting through committees, like the layup the
rubber stamp, and it's incredibly rare to see something fail
on this level. The fact that the chairman, Jody Errington,
even brought this to a vote, clearly knowing that he
didn't have the numbers is remarkable.
Speaker 4 (01:30):
You mentioned Chip Roy, Ralph Norman.
Speaker 3 (01:32):
These are frequent critics of legislation on Capitol Hill that
doesn't cut spending enough, and they know what it's like
to get a phone.
Speaker 4 (01:39):
Call from Donald Trump. Well, just things can happen here,
you know what. Yeah, he's on the plane right now,
by the way.
Speaker 3 (01:45):
I don't know if he's taken a nap, tim or
if he's actually on the phone with them, But this
could be a pretty dicey weekend for these guys as
they try to put the pieces back together. Well, that's
exactly where I wanted to go, Joe, because we saw
what happened in the last several months when Republican members
of Congress have not gotten on board all it takes
is maybe a phone call or too from the President,
perhaps even maybe from some of his allies or from
(02:06):
Speaker Johnson. What's the president's next move here? What political
capital does he have to push these guys to get
on board.
Speaker 4 (02:15):
Well, it's a great question.
Speaker 3 (02:16):
He was on Truth Social earlier today saying stop talking
and get it done. He was referring to the grand
Standards as he likes to call them, the names that
we've already used here.
Speaker 4 (02:25):
The vote was twenty one sixteen, so.
Speaker 3 (02:27):
You've got more than a couple Republicans to convince here.
But there's a lot of moving parts when you're trying
to find balance in something like this, and the whole
matter of salt that we talk about a lot here
on Bloomberg is right in the middle of it. If
you're going to make the New York Republicans happy and
raise the cap on salt, you're going to upset other
people who want to see steeper cuts to make up
(02:49):
for that, And that's the balancing act the Speaker Johnson
is in right now. He clearly hasn't found the balance.
But just to give you a sense of what this means,
we had the Budget Committee today it was supposed to
go to the Rules Committee on Monday, which is kind
of the gatekeeper to the floor. And then as the
Speaker promised a vote on the floor by Memorial Day,
they're not going to fool around with that Memorial Day break.
Speaker 4 (03:09):
Everyone's going home one way or the other.
Speaker 3 (03:11):
So this whole timeline could suddenly be off the rails
when you consider what's coming in terms of the debt
limit and so forth. It could be a complicated summer
one that was already complicated, it could be even more so.
Speaker 5 (03:22):
Okay, so everyone's not going to be there voting on
this on Memorial.
Speaker 6 (03:26):
Day, Joe.
Speaker 5 (03:27):
So what do we know about just exactly what happens
next with the timeline here.
Speaker 3 (03:32):
Well, they'll probably get a couple of booze when they're
in the Memorial Day parade if people are actually paying
attention at home.
Speaker 4 (03:37):
But we have to remind ourselves.
Speaker 3 (03:39):
This is the signature piece of legislation for the Trump administration.
This is what he calls one big, beautiful bill. This
is to extend or make permanent the Trump tax cuts.
Think about the promises on the trail, no taxes on tips,
no taxes on overtime. We already went through salt. They
kind of have to get this done. And when we
(04:01):
find out in a couple of weeks what the real
x state is on the debt ceiling, that's going to
be maybe the gas on the fire that gets people together.
The fact of the matter is, though, I'll make this
even more difficult. Once all this is potentially done in
the House, it goes to the Senate and they're going
to rewrite the whole thing. They're going to make all
kinds of changes and probably turn back some of the
cuts that were made to Medicaid to pay for some
(04:24):
of this stuff. And all these same guys in the
House who didn't like this bill today will like it
even less then.
Speaker 4 (04:29):
And then where are.
Speaker 2 (04:30):
We Well, Joe, Well, you're talking to us. Kaylee's sending
us tweets. This one coming from NBC News reporting that
the House Budget Committee Republicans are going to try to
reconvene on Sunday at ten pm.
Speaker 4 (04:44):
Oh, that'll go, well, what happened to account? And then
they don't have bedtimes.
Speaker 3 (04:51):
They had a couple of overnight committee hearings already this week,
you know, like sixteen hours long. We had lawmakers fallen
asleep at four in the morning. They're good at this.
It's hydro. They'll bring in the takeout and the wine
and maybe the cots. Then it'll make for great TV
on Monday morning. Whether they can actually get anything done though,
we saw them bring it to a vote today without
being able to answer that. So what changes in the
(05:12):
next couple of days aside from aside from some arm
twisting from President Trump.
Speaker 4 (05:16):
I don't know.
Speaker 2 (05:17):
Hey, Joe, Before we let you go, we got about
a minute left. We wanted to talk to you also
about takeaways from President Trump's overseas trip four days in
the Middle East, the tour that really focused on making deals.
How would you just describe for us the view of
this region by this administration and how it differs from
previous administrations.
Speaker 3 (05:38):
You know, we talked to former Congressman Denver Riggleman about
that today. He joined us live on Balance of Power
from Dubai. He's actually founded an AI company of his own,
and he's in the mix over there, and he was
talking about this incredibly important moment as this region has
opened up to the likes of Nvidia, AMD on the
friendly list, if you will.
Speaker 4 (05:56):
When it comes to high tech chip exports.
Speaker 3 (05:58):
This is an incredible moment of opportunity, I think, not
only for the administration but for the industry here as
we look for options to turn away from China. Pretty
incredible the dollar figures that we saw announced on this trip,
and it's also a whole new look optically at what
a presidential trip could look like here leading with the
dollar signs and kind of backstopping with the politics.
Speaker 4 (06:17):
I'll say one thing.
Speaker 3 (06:18):
Though, nobody got to Turkey today named Trump or Putin
for Ukraine peace talks. That was something we were holding
out for and it's not going to happen this time.
Speaker 4 (06:26):
That will remain on a lower level.
Speaker 2 (06:28):
Okay, Well, thanks for the updated Joe from Washington really appreciated.
I want you to get some rests this week, and
because I know you're going to be busy following all
the happenings in Washington, DC. Also, don't miss Joe and
Kayley to the late edition of Balance of Power.
Speaker 1 (06:40):
You're listening to the Bloomberg Business Week Daily podcast. Catch
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Speaker 2 (06:54):
Well, President Trump said on Thursday that India has made
an offer to drop tariffs on US goods, is then
negotiates a deal to a higher import taxes. We know
our next guest is watching this closely. He's featured in
the upcoming weekly CFO Briefing newsletter. It's written by Nina
Treatmanchi's Bloomberg News senior editor. You can also sign up
for it at Bloomberg dot com slash CFO Dash of Briefing.
(07:16):
Nina joins us now along with Kabir Ahmed Shakir, CFO
of Tatak Communications.
Speaker 4 (07:21):
Nina, I want to start with you.
Speaker 2 (07:22):
Why did you choose to feature Kabir in the upcoming
CFO Briefing newsletter.
Speaker 7 (07:26):
Well, it seems as it's good timing right, India is
in the news. We've also seen a fair amount of
tensions recently in between India and Pakistan, so we're also
talking talked about risks to Kabir, So yeah, it seemed
to be a good time. Kabir, thank you very much
for staying up so late. It's I think around midnight
in Mumbai, so thank you very much for joining us.
(07:47):
We've just heard from Tim on on the outlook for
for India. Just wondering what that means for your business
as as you're growing your business at Tata.
Speaker 8 (07:58):
Thanks Leinaim for having me on the show. Yeah, and
it's almost going to be midnight here, But quite excited
to be on the show. As we spoke you know
earlier as well, I'm cautiously optimistic about what the what
the year will unfold for us. We are working tirelessly
on our strategy and executing on our strategy, and and
(08:21):
of course business is not ever going to be static.
The environment is going to go keep throwing challenges at us.
But I guess we have a resilient business. We are
in the in the B two B space and we
are here to serve our customers, and our products and
services help our customers both on the revenue side and
(08:41):
the cost side outcome. So managing volatility, helping them grow,
helping them manage their their bottom line and their risk
is what we do day in and day out. So
I'm excited to continue to partner and and help our customers.
Speaker 2 (08:55):
I'm curious about how terraiffs specifically affect you. Even though
you're based in any you're a global company. You essentially
connect eighty percent of mobile customers worldwide. You serve three
hundred of the Fortune five hundred companies in some way.
But tariffs affect products, hardware, infrastructure, technology. How would tariffs
(09:17):
affect your business? How do they affect your business?
Speaker 8 (09:20):
Well, there are two ways in which it could affect
our business. One is directly, you know, because we are
in the telecom space and we do procure hardware equipment
which we deliver as part of the overall service to
our customers. So it does impact there, but that impact
is very negligible and insignificant. So I'm literally not worried
(09:42):
about the direct impact. What worries me is even so
much so not the tariffs but the volatility, the uncertainty
leading up to it. So from the time President announced
and then there was a pause and now there is
a bit of a you know of a withdraw So
we don't know when this turbidity is going to you know,
(10:04):
going to stop and when there's going to be more clarity.
So when we see this uncertainty with our customers, the
delay in decision making is something that is likely to
push you know, revenue or although as of no I
have not seen this in our autobook as yet. And
that's the reason why I use the word cautiously optimistic,
(10:24):
right that we would like to be cautious to see
what's that that conversation that's happening in our customer boardrooms
and how we can, you know, help them.
Speaker 7 (10:34):
Maybe I can jump in here, career just thinking about
the relationships between India and the US. I'm wondering how
you're seeing additional growth opportunities for your business. I know
you've told me the US is an important part for
your business. You've done two transactions here recently. Just talk
to us a little bit about how you're seeing that develop.
Speaker 8 (10:52):
Yeah, US is a very very important market for US,
and we want to grow US to to billion dollars
of our business. We are currently about little under two
and a half billion dollars for now and US kind
of totals up to around seven hundred sound fifty. So
we'd like to take it to to billion dollars in
(11:12):
the very near future. So we've invested both in terms
of product capabilities for the business, go to market capabilities,
feet down street and everything that we can.
Speaker 9 (11:22):
Do to grow the business.
Speaker 8 (11:24):
So therefore, our strategy is still steadfast and we will
look for both organic and inorganic opportunities to grow our
footprint in the US.
Speaker 9 (11:34):
So we are committed to that.
Speaker 5 (11:36):
Kare what is the M and A outlook like, because
at least in the US we had a pretty big
media deal announced today with Charter and cocks. Are you
looking at any potential M and A activity?
Speaker 8 (11:49):
We are continuously scanning if I may, and there are
you know, targets.
Speaker 9 (11:54):
That we will look at.
Speaker 8 (11:57):
If you if you look at our business, our data
business has two chunky parts. There's a core connectivity part
of the business, our traditional telecom point to point connectivity
and you know and Ethernet and you know international these
lines and then something in cable that we that we have.
So that's you know, roughly about half of our business
and the other half is a digital portfolio which we
(12:20):
call the overlay services, where we use the connectivity as
a foot in the door and then provide valuated services
to our customers, whether it is whether it's the customer
interaction you know, suite offerings that we have, whether it's
IoT move cloud security, you know, and all of those
offerings that we do.
Speaker 9 (12:39):
It is in that space that I would.
Speaker 8 (12:41):
Be we would be really looking for any potential targets
that could either I would say, bolt on and fill
any portfolio gaps I may have in my product offering
or even help us with the go to market you
know offering. I'll give you an recent example when we
boxed Switch, and it was a primarily a US based business.
Speaker 9 (13:05):
Switch gave us two capabilities.
Speaker 8 (13:07):
One we were It gave us the media transmission business
in the US and that was very very important for us.
Plus it also gave us the media production you know capability,
so we could backward integrate and offer more, you know,
more product offerings to our customers, and we could take
that globally as well. So it made a lot of
(13:30):
sense for us to get a footprint in the US
geography and then use that capability to even go global.
So assets like that will be of interest for us,
and we continuous to scan for them.
Speaker 7 (13:41):
Yeah, Kabir, just wondering based on the fact that you're
based in India. We've seen some geopolitical tensions there recently,
not the only place in the world where we're seeing
that flare up recently. Just wandering from a CFO perspective,
how do you navigate these kind of geopolitical risks and
how far has has risked management become more important to us,
(14:01):
to you and also sort of how does that work?
Speaker 8 (14:06):
Uh you know, I mean, I would say we have
a very very robust risk management framework and today it
is geopolitical risk. Yesterday it was something called COVID pandemic,
and not more than a decade ago, it was a
Layman collapse, and you know, and the crude oil crisis.
Speaker 9 (14:23):
So we've seen and every time when this event.
Speaker 8 (14:26):
Happens, we call it a one off event, a black
Swan event. But I guess all organizations you know sailed
through this. They have a resilient, resilient PNDL and balance
sheet and resilient culture that helps them navigate through this.
Speaker 9 (14:42):
And we are no different.
Speaker 8 (14:43):
And we are a global organization, so therefore we are
not insulated to only domestic you know issues. Every morning
we wake up with something happening, you know, across the world,
the geopolitical conflict.
Speaker 9 (14:55):
As when we.
Speaker 8 (14:56):
Spoke and I mentioned, uh, it never has ever it
happened that we had three cable systems go down at
the same point in time in the last twenty year
history ever, which happened about nine months ago, and that's
because of the Red Sea conflict that.
Speaker 9 (15:08):
You actually, you know, actually see.
Speaker 8 (15:10):
So we have woken up to the reality that despite
these pressures, we need to continue to be you know,
serving our customers, providing them you know, diverse paths, giving
them alternatives so that their business you know, keeps running.
That's the reason why they come to come to us
in the first place. So when we chop out plants,
we of course look at the likelihood and the impact
(15:32):
of any of these events occurring, and depending on the severity,
either we are acting on them.
Speaker 9 (15:37):
Right now, having a plan A plan B plan.
Speaker 8 (15:39):
See ready, or or if not, you know, keep watching
that space if it develops in any way disadvantaging us
and have mitigation plans.
Speaker 2 (15:50):
We're speaking with Kabira Ahmed Shakir, CEO of Taught Communications. Kabir,
you have this perch as CFO of the company that
operates or has business i should say, and close to
two hundred countries around the world, so you understand where
there's weakness, where there's strength. What are you hearing from
customers right now? This isn't exactly discretionary spending that they
(16:12):
do when it comes to it, When it comes to telecom.
But are there areas of the world where you're seeing
strength or the areas of the world where you're seeing
weakness right now?
Speaker 8 (16:23):
Look when when we look at any of these things
impacting like the tariffs. Of course there's a prediction on
especially in the US, the very recent goldment As Sects
report of last month suggests that spend levels are going
to be pretty static compared to last year. So and
the probability of CAPEX coming down is at high as
(16:45):
forty five percent. So you see all those you know
statistics coming in and I can understand why because of
the uncertainty and if people, if customers need to rewire
their supply chains, then they would rather preserve the cash
for that than you know spending on important but non
urgent you know it spends. So that's one dilemma. The
(17:06):
other conundrum that they actually have is clearly there is
a pomo I mean, with the with the buzzword of
AI going through every you know, organization is also looking
at our investing in AI and our future proving our business.
So therefore not investing and not spending on that space
is not an option either. So that's the kind of
(17:27):
conundrum that the customers are in and and we are
helping our customers to look through this bring clarity as
soon as possible so that they do not you know,
suffer the consequences of an intercision on and not spending
in time.
Speaker 9 (17:43):
So it's a it's a tricky situation.
Speaker 8 (17:45):
So I'm not saying it's easy, but you see that
consistently across you know, industries quite often with network it
so happens. You know, tim is if it ain't broken,
why fix it. You know, that's the kind of attitude
you know people have. So it's very normal too to
try and push back that spend, but as I said,
(18:07):
with a coming in, it's very difficult for them to
push back for too long.
Speaker 2 (18:11):
Yeah, certainly a theme that we saw when it came
to the most recent round of earnings reports from companies
here in the US that that AI spend is continuing.
Kabir Amtshakier, thanks so much for joining us CFO of
tak Talk Communications. Also a big thank you to Nina Trentman,
senior editor at Bloomberg News. Check out the CFO briefing
by Nina Trentman. You can sign up at Bloomberg dot
com slash newsletters, or go directly there at Bloomberg dot
(18:32):
com slash cf.
Speaker 1 (18:35):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Just say Alexa play Bloomberg eleven thirty And we.
Speaker 2 (18:53):
Got a special guest for our Drive to the Close today.
That's Craig Moffatt. He's founding partner and senior analyst at
Mofitt Nathan and he joins us from Craigs. Deal such
as this in the year twenty twenty five, could it
face regulatory scrutiny?
Speaker 10 (19:09):
Hey Tim, good to be here. You know, you wouldn't
think so Cox and Charter are adjacent. They don't directly
compete with each other. Charters pricing strategies in their go
to market strategy is pro competitive and pro consumer. So
you wouldn't think that this deal would face any challenges
(19:29):
even at the state level, because they'll also have to
get approvals from the Public Service Commissions and public utility
commissions in the individual states involved. You wouldn't think it
would see any challenges, but again, things have been sort
of unpredictable when you get DEI considerations and things like
that that can hang up. Otherwise, big deals that are
(19:50):
ready for approval, you do have to be at least
some somewhat circumspect about what kind of process it will face.
Speaker 2 (19:57):
Okay, that's a deep tease for the Horizon Frontier conmerce
we're going to have in a few minutes. But we
want to stick on Charter and Cox right now because
that is the big deal of the day, right.
Speaker 5 (20:05):
And Craig, so you joined the show in January. I
think Carol Masser was here. It wasn't me. I'm filling
in for her. But your top pick for twenty twenty
five was Charter Communications. So I'm wondering, how has your
view changed on the company in light of today's deal news.
Speaker 10 (20:22):
Well, you know, nice to see, Emily. I think it's
actually not changed at all. And in fact, I suspect
that the reason that Cox was finally willing to agree
to a merger after twenty years of being asked, or really,
I guess almost twenty years of being asked, they went
private back in two thousand and eight.
Speaker 9 (20:42):
If I recall is that.
Speaker 10 (20:46):
The Charter momentum, and in particular the Charter momentum in
wireless and the converged offering of wireless and broadband together
was so compelling that I think Cox probably said we're
better off to be part of the Charter family. After
saying no to mergers for twenty years, maybe it's finally time.
Speaker 4 (21:09):
Is it time?
Speaker 2 (21:10):
Because of what has happened in this industry over the
last twenty years, the rise of streaming, the cord cutting
that we're seeing, the decline of the secular decline of
you know, what's known as the cable bundle, and just
the disruption that we've seen, I mean in your career
has been pretty remarkable.
Speaker 10 (21:30):
It has, but I don't think that's really behind it.
You know, it's easy to probably the younger listeners don't
remember when when cable was about video. Cable's core product
hasn't really been video for fifteen years. Cable's core product
has been broadband for at least fifteen years, and so
(21:52):
it's really all about broadband. What's changed is that we're
now seeing broadband and mobile service being offered together in
this kind of what is typically called within the industry convergence.
But which they're trying to sell to customers is just
sort of connectivity everywhere. The CEO of Charter was speaking
(22:13):
at the Mouffet Nathanson Conference for US yesterday and was
saying that he thinks when a customer pulls out of
their driveway, they don't really care who's providing the service
in the driveway, who's providing the service in the house,
and who's providing the service outside of the house. They
just want to make sure it works in all those places.
And so what they're trying to do is convince customers
(22:37):
that we can give you a better deal at a
much lower price and give you the best connectivity everywhere.
And it's working for Charter, and that's I think why
the stock is up almost sixty percent year to date,
it's been over the past twelve months. I think it's
just people are starting to see the fruits of that strategy.
(22:58):
And I think that's again precisely what Cox saw. And
Cox has an agreement with Verizon for carrying wireless traffic
that they are not able to put over Wi Fi
over over their own network the same as Charter does,
but it's not as good a deal. And so I
think A lot of this was driven by we want
to be on the Charter deal that has better economics
(23:21):
and better terms than the deal that we have with Verizon.
Speaker 2 (23:24):
Is this going to keep working for Charter Communications given
the competition that they're seeing from the wireless companies that
are now doing broadband into homes. I mean, I have
Verizon or Charter offered where I live, and I can
get FiOS for forty bucks a month for a really
fast connection because it competes with Charter right there.
Speaker 10 (23:45):
Yeah, you're exactly right, Tim. That's why you've seen pressure
on the broadband subscriber numbers from Charter and Comcast and
the rest of the cable industry. The answer to that
that the cable operators have been pushed is, well, a
broadband competitor may be able to save you twenty dollars
(24:07):
a month on your on your broadband subscription, but we
can save you seventy five dollars a month on your
wireless subscription if you take it all together, and you
will end up being much better off financially and have
a better product. And that's a wireless service that actually
while the cellular portion runs over the Verizon network, it
(24:30):
actually beats Verizon in network testing results because the time
that it's not on the Verizon network is actually running
faster than the Verizon network does. And so it is
by far the best, the lowest price deal available to customers.
And that's what the cable operators are leaning into.
Speaker 5 (24:52):
So what's the plan here for infrastructure and building out
just more infrastructure for Internet the home. Are the combined
companies now chartering cocks going to be building out more fiber?
That's kind of the infrastructure that delivers the fastest connection here, right.
Speaker 10 (25:10):
Well, then there's a narrative that that fiber to the
home or what the industry is called FTTCH is better
than cable infrastructure. It's not really. They are largely the same.
In fact, overseas, there have been all these cases that
have demonstrated that cable actually has more fiber than fiber
to the home does. That is, a packet is delivered
(25:32):
over cable spends more time on fiber than it does
even on a fiber to the home network. So the
networks are largely interchangeable today. There simply isn't really an
advantage to having something that's called fiber over something that's
called a cable network. So it really comes down to price,
(25:53):
and the most differentiated part of the offer is actually
in the mobility side.
Speaker 2 (25:57):
Hey, Craig, before we let you go, promise we do
the thirty seconds at least on Verizon winning FCC approval
for its nine point six billion dollar acquisition of Frontier
Communications Parent Inc. Why do in your view did this
deal go through?
Speaker 10 (26:11):
Well, I think it's pretty clear it went through because
they agreed to end all their DEI programs at Verizon
and the deal was approved minutes after that and so,
and that had been the hang up that the FCC
had had.
Speaker 4 (26:27):
With the deal.
Speaker 10 (26:30):
But it's also that deal is interesting because why is
Verizon buying Frontier. They're buying Frontier because they want a
bigger wireline footprint.
Speaker 9 (26:40):
Remember they were.
Speaker 2 (26:41):
Craig unfortunately got to leave it there. Craig Moffatt over
at mafat Nathansen.
Speaker 1 (26:45):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Apple Karplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (27:00):
All right, well, we are watching all the economic data
that we are getting very closely, including real estate data.
Housing starts increased in April, as a pickup in multi
family home construction more than offseted decline in single family
dwellings caused by elevated inventory. Back with us as Katie Hubbard,
she's executive vice president of Capital Markets at Walton Global.
It's the privately owned asset and real estate investment company.
(27:22):
It's got about four point four billion dollars in nearly
eighty one thousand acres of land under management in the US. Katie,
always good to have you on the program. If you
think about where we are right now versus where we
are when we last spoke to you back in March,
what is the biggest shift that's taken place from your perch?
Speaker 11 (27:40):
Yeah, Tim, thanks so much for having me. I would
say the biggest shift is just weak spring selling season.
Typically thirty seven percent of all sales by public homebuilders
are made in February through May, and they just have
not had the traffic. And it's really because of elevated
borrowing costs that we're seeing. Mortgage rates are still high,
and then the uncertainty and the is keeping people from shopping.
Speaker 5 (28:03):
Katie, I want to get your take on the economic
data that we got out today housing starts, because I'm
looking at it, we have multi family home construction like
apartment buildings jumped, but then single family home construction decreased.
What do you make of this divergence? What is it
telling us about the overall housing economy right now?
Speaker 11 (28:25):
Yes, I mean the public homebuilders are really doing what
they can to protect their balance sheets, so they're not
wanting to overbuild with the weak spring season, so they've
really pulled back on their housing starts. Typically they're going
to be starting about three homes per community across the nation,
and you're at less than two point seven homes per community,
So they're just building less because they don't want to
(28:47):
be stuck with inventory that they can't sell. Because when
they have inventory sitting there, they're having to slash prices
to keep the units going. And then there just continues
to be a pent up demand in the rental market
because of the lack of affordability in the single family market.
Speaker 6 (29:01):
It's keeping the developers hungry to build. And on the multifamily.
Speaker 2 (29:06):
Katie, let's go a big picture and talk about a
theme that has emerged over the last few years and
especially emerged during this last presidential election cycle, and that
has to do with housing affordability. Housing availability touched on
it when you talked about rental and home prices as well.
Are these homes going to get built in places where
homes don't traditionally get built. I mean, that was one
(29:27):
of the ideas that was presented during the campaign by
Vice President and then candidate Jade Vance was building on
federal lands. In your view, is that how the US
is going to tackle this housing problem?
Speaker 6 (29:39):
That is a great question.
Speaker 11 (29:40):
So we're just coming off of the ULI conference where
they're talking a lot about affordability and how we're going
to be able to build homes that not only are affordable,
but also attainable for people that aren't looking for, you know,
affordable homes with government assistants. Really what's happening is developers
are moving out into like further out into the suburbs
where they can build and the land is more affordable.
(30:01):
The challenge then, of course, then you don't have the
utilities availabilities, you don't have water sewer to be able
to build big master planned communities here and lies the
problem with the government. Yes, does own five hundred million
acres of land that they could just say, hey, you
can build on this, But then you have to have
public private partnerships and it has to be a win
win where everybody along the value chain can make money.
(30:23):
And then if you look at the land that the
government owns, it's the wrong land and the wrong location
without the availability to actually build on it.
Speaker 6 (30:31):
Physically, you can't build.
Speaker 11 (30:32):
And then the people who would be potentially living in
places where the government owns land, we're talking you know,
the desert, the mountains, there's no jobs there.
Speaker 6 (30:41):
So that just it sounds good, but it's just not
a viable option.
Speaker 2 (30:44):
Yeah, I heard there are three things that are important
when it comes to real estate. Location, location, location, I've
heard that before. So then is the answer in up
zoning or rezoning? Is the answer in changing local laws
in municipalities to allow more dense home homes and perhaps
getting rid of parking requirements and really concentrating on areas
(31:04):
where the economic activity is and making sure that people
can find available housing in these areas. Is that the
key that really is.
Speaker 11 (31:12):
We need deregulation to make permitting easier, to make the
densities better for developers so that they can make their
numbers pencil. The challenges just in those core in those
urban core areas where that we're talking about, there's not
a lot of availability of land. And I'm sure if
somebody came, you know, I wanted to build an affordable
multi family development on a park in.
Speaker 6 (31:33):
Your neighborhood, you wouldn't want that.
Speaker 11 (31:34):
So you've got, you know, the not mind backyard mentality
at Uli they were talking about, now they've got a
yigbee yes, and God's backyard where they're actually looking at
taking religious institutions that maybe are abandoned, are not being utilized,
and putting affordable housing in there. So there's a lot
of you know, discussion about ways to make it work,
and one of the ways is through just engineering. Being
(31:56):
able to build homes at a faster pace through through engineering.
So there's that is coming in. I would say, if
you've looked at Boxable, that's you know what you can
like unfold the house in three days.
Speaker 6 (32:07):
Doing that on a larger scale with bigger buildings.
Speaker 5 (32:10):
I'm wondering how tariffs and the trade war impact that.
What you're talking about specifically, like the speed at which
home builders can actually build and source raw materials, what
are you seeing right now about how tariffs are impacting
the housing supply chain?
Speaker 11 (32:27):
Yeah, so today it's actually better than we thought. The
pause on the tariffs has helped right now, you're looking
at about two to four percent that has actually impacted
the building costs today and homebuilders just are not passing
that on to the end users. They were anticipating a
six point eight percent increase in materials this year, but
(32:47):
it's actually been less than expected.
Speaker 2 (32:49):
What's the what's the biggest issue? Is it lumber from Canada?
Is it gypsum from Mexico?
Speaker 4 (32:54):
What is it?
Speaker 6 (32:55):
You know, it's really it's all of the above.
Speaker 11 (32:58):
It's you know, you've got steel, you've got appliances coming
from China is a big one. The houses that they're
building today, they have purchased materials in the past, so
it's really looking forward. And that's another reason why they've
slowed down their starts, is because they don't really know
what the prices of those goods are going to be
for those future homes, and we really need that to
stabilize across the board.
Speaker 6 (33:18):
But yes, it's all the things that you mentioned.
Speaker 4 (33:19):
Him, Katie, What have you heard?
Speaker 2 (33:21):
And you know, we talked about this a few months ago,
but I want to get an update from you on this.
What have you heard recently from the home builders about labor,
especially with regard to the immigration crackdown that we've seen
in the US. Our home builders finding enough people to
work for them, and then are their sub contractors finding
those folks too.
Speaker 11 (33:38):
Yeah, what's interesting is that they're not really reporting a
shortage in labor. They're actually having some of their trades
contact them and asking for more work just because there
has been a slow down in construction across the board,
So that has not really affected them that much.
Speaker 6 (33:52):
Yet. What where you're going.
Speaker 11 (33:53):
To see that affect the market the most is in
the fifty unit in below multifamily market because the people
that are now not immigrating to the US or have
left are typically the renters that are renting those those
smaller multifamily houses.
Speaker 5 (34:09):
Before we let you go, we have just about a
minute left, but I have to ask about mortgage rates
because Trump has been pressuring the Federal Reserve to cut
rates faster. Does the housing market need an acceleration in
the path of cutting rates? How much do we have
to see rates come down?
Speaker 11 (34:28):
I mean, definitely the sweet spot is sub six percent.
There's so many people that are on the sidelines, you know,
waiting and hoping hearing that rates are coming down. Even
when the Fed does cut rates, though that doesn't typically
affect the thirty year fix. It's really tied to the
tenure treasury, and that is really tied to inflation. So
sticky inflation is keeping the tenure high. At six point
(34:48):
sevent eight is the thirty year fix today. We really
need the tenure to get down to about three point
seventy eight for the rates to hit below six. So
we don't see that happening this year or next year,
but that would definitely help.
Speaker 2 (35:00):
Katie always good to check in with you. Appreciate you
taking the time and joining us on this Friday afternoon.
Katie Hubbard, she's executive a vice president of capital markets
over at a Walton Global. A reminder, they've got about
four point four billion dollars and eighty one thousand acres
in land throughout the US under management.
Speaker 1 (35:17):
This is the Bloomberg Business Weekdaily podcast, available on Apple,
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(35:37):
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(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Let's now go to Washington for the latest from the Capitol,
where a key House committee on Friday failed to advance
House Republicans massive tax and spending bill. This after hardline
conservatives bucked President Trump and block the bill over cost concerns.
We got Joe Matthew with us. He's co host of
Bloomberg at Balance of Power. He joins us from our
Washington DC Bureau. Joe Representatives Chip Roy, Ralph Norman, Josh Breacon,
(00:55):
Andrew Clyde joined Democrats to vote against this.
Speaker 3 (00:59):
What happens now, Well, that's a great question, and that's
the one we're all asking.
Speaker 4 (01:04):
This happened right around noontime. Tim. It's great to be
with you today, and you know you're going to hear
a lot.
Speaker 3 (01:09):
Of people speculate about the fate of this bill based
on this failure, and I won't try to do that
right now. What I will tell you is this is
not the way it's supposed to be done. This is
the easy part getting through committees, like the layup the
rubber stamp, and it's incredibly rare to see something fail
on this level. The fact that the chairman, Jody Errington,
even brought this to a vote, clearly knowing that he
didn't have the numbers is remarkable.
Speaker 4 (01:30):
You mentioned Chip Roy, Ralph Norman.
Speaker 3 (01:32):
These are frequent critics of legislation on Capitol Hill that
doesn't cut spending enough, and they know what it's like
to get a phone.
Speaker 4 (01:39):
Call from Donald Trump. Well, just things can happen here,
you know what. Yeah, he's on the plane right now,
by the way.
Speaker 3 (01:45):
I don't know if he's taken a nap, tim or
if he's actually on the phone with them, But this
could be a pretty dicey weekend for these guys as
they try to put the pieces back together. Well, that's
exactly where I wanted to go, Joe, because we saw
what happened in the last several months when Republican members
of Congress have not gotten on board all it takes
is maybe a phone call or too from the President,
perhaps even maybe from some of his allies or from
(02:06):
Speaker Johnson. What's the president's next move here? What political
capital does he have to push these guys to get
on board.
Speaker 4 (02:15):
Well, it's a great question.
Speaker 3 (02:16):
He was on Truth Social earlier today saying stop talking
and get it done. He was referring to the grand
Standards as he likes to call them, the names that
we've already used here.
Speaker 4 (02:25):
The vote was twenty one sixteen, so.
Speaker 3 (02:27):
You've got more than a couple Republicans to convince here.
But there's a lot of moving parts when you're trying
to find balance in something like this, and the whole
matter of salt that we talk about a lot here
on Bloomberg is right in the middle of it. If
you're going to make the New York Republicans happy and
raise the cap on salt, you're going to upset other
people who want to see steeper cuts to make up
(02:49):
for that, And that's the balancing act the Speaker Johnson
is in right now. He clearly hasn't found the balance.
But just to give you a sense of what this means,
we had the Budget Committee today it was supposed to
go to the Rules Committee on Monday, which is kind
of the gatekeeper to the floor. And then as the
Speaker promised a vote on the floor by Memorial Day,
they're not going to fool around with that Memorial Day break.
Speaker 4 (03:09):
Everyone's going home one way or the other.
Speaker 3 (03:11):
So this whole timeline could suddenly be off the rails
when you consider what's coming in terms of the debt
limit and so forth. It could be a complicated summer
one that was already complicated, it could be even more so.
Speaker 5 (03:22):
Okay, so everyone's not going to be there voting on
this on Memorial.
Speaker 6 (03:26):
Day, Joe.
Speaker 5 (03:27):
So what do we know about just exactly what happens
next with the timeline here.
Speaker 3 (03:32):
Well, they'll probably get a couple of booze when they're
in the Memorial Day parade if people are actually paying
attention at home.
Speaker 4 (03:37):
But we have to remind ourselves.
Speaker 3 (03:39):
This is the signature piece of legislation for the Trump administration.
This is what he calls one big, beautiful bill. This
is to extend or make permanent the Trump tax cuts.
Think about the promises on the trail, no taxes on tips,
no taxes on overtime. We already went through salt. They
kind of have to get this done. And when we
(04:01):
find out in a couple of weeks what the real
x state is on the debt ceiling, that's going to
be maybe the gas on the fire that gets people together.
The fact of the matter is, though, I'll make this
even more difficult. Once all this is potentially done in
the House, it goes to the Senate and they're going
to rewrite the whole thing. They're going to make all
kinds of changes and probably turn back some of the
cuts that were made to Medicaid to pay for some
(04:24):
of this stuff. And all these same guys in the
House who didn't like this bill today will like it
even less then.
Speaker 4 (04:29):
And then where are.
Speaker 2 (04:30):
We Well, Joe, Well, you're talking to us. Kaylee's sending
us tweets. This one coming from NBC News reporting that
the House Budget Committee Republicans are going to try to
reconvene on Sunday at ten pm.
Speaker 4 (04:44):
Oh, that'll go, well, what happened to account? And then
they don't have bedtimes.
Speaker 3 (04:51):
They had a couple of overnight committee hearings already this week,
you know, like sixteen hours long. We had lawmakers fallen
asleep at four in the morning. They're good at this.
It's hydro. They'll bring in the takeout and the wine
and maybe the cots. Then it'll make for great TV
on Monday morning. Whether they can actually get anything done though,
we saw them bring it to a vote today without
being able to answer that. So what changes in the
(05:12):
next couple of days aside from aside from some arm
twisting from President Trump.
Speaker 4 (05:16):
I don't know.
Speaker 2 (05:17):
Hey, Joe, Before we let you go, we got about
a minute left. We wanted to talk to you also
about takeaways from President Trump's overseas trip four days in
the Middle East, the tour that really focused on making deals.
How would you just describe for us the view of
this region by this administration and how it differs from
previous administrations.
Speaker 3 (05:38):
You know, we talked to former Congressman Denver Riggleman about
that today. He joined us live on Balance of Power
from Dubai. He's actually founded an AI company of his own,
and he's in the mix over there, and he was
talking about this incredibly important moment as this region has
opened up to the likes of Nvidia, AMD on the
friendly list, if you will.
Speaker 4 (05:56):
When it comes to high tech chip exports.
Speaker 3 (05:58):
This is an incredible moment of opportunity, I think, not
only for the administration but for the industry here as
we look for options to turn away from China. Pretty
incredible the dollar figures that we saw announced on this trip,
and it's also a whole new look optically at what
a presidential trip could look like here leading with the
dollar signs and kind of backstopping with the politics.
Speaker 4 (06:17):
I'll say one thing.
Speaker 3 (06:18):
Though, nobody got to Turkey today named Trump or Putin
for Ukraine peace talks. That was something we were holding
out for and it's not going to happen this time.
Speaker 4 (06:26):
That will remain on a lower level.
Speaker 2 (06:28):
Okay, Well, thanks for the updated Joe from Washington really appreciated.
I want you to get some rests this week, and
because I know you're going to be busy following all
the happenings in Washington, DC. Also, don't miss Joe and
Kayley to the late edition of Balance of Power.
Speaker 1 (06:40):
You're listening to the Bloomberg Business Week Daily podcast. Catch
US Live weekday afternoons from two to five Easter and
listen on Applecarplay and Android Otto with the Bloomberg Business app,
or watch US Live on YouTube.
Speaker 2 (06:54):
Well, President Trump said on Thursday that India has made
an offer to drop tariffs on US goods, is then
negotiates a deal to a higher import taxes. We know
our next guest is watching this closely. He's featured in
the upcoming weekly CFO Briefing newsletter. It's written by Nina
Treatmanchi's Bloomberg News senior editor. You can also sign up
for it at Bloomberg dot com slash CFO Dash of Briefing.
(07:16):
Nina joins us now along with Kabir Ahmed Shakir, CFO
of Tatak Communications.
Speaker 4 (07:21):
Nina, I want to start with you.
Speaker 2 (07:22):
Why did you choose to feature Kabir in the upcoming
CFO Briefing newsletter.
Speaker 7 (07:26):
Well, it seems as it's good timing right, India is
in the news. We've also seen a fair amount of
tensions recently in between India and Pakistan, so we're also
talking talked about risks to Kabir, So yeah, it seemed
to be a good time. Kabir, thank you very much
for staying up so late. It's I think around midnight
in Mumbai, so thank you very much for joining us.
(07:47):
We've just heard from Tim on on the outlook for
for India. Just wondering what that means for your business
as as you're growing your business at Tata.
Speaker 8 (07:58):
Thanks Leinaim for having me on the show. Yeah, and
it's almost going to be midnight here, But quite excited
to be on the show. As we spoke you know
earlier as well, I'm cautiously optimistic about what the what
the year will unfold for us. We are working tirelessly
on our strategy and executing on our strategy, and and
(08:21):
of course business is not ever going to be static.
The environment is going to go keep throwing challenges at us.
But I guess we have a resilient business. We are
in the in the B two B space and we
are here to serve our customers, and our products and
services help our customers both on the revenue side and
(08:41):
the cost side outcome. So managing volatility, helping them grow,
helping them manage their their bottom line and their risk
is what we do day in and day out. So
I'm excited to continue to partner and and help our customers.
Speaker 2 (08:55):
I'm curious about how terraiffs specifically affect you. Even though
you're based in any you're a global company. You essentially
connect eighty percent of mobile customers worldwide. You serve three
hundred of the Fortune five hundred companies in some way.
But tariffs affect products, hardware, infrastructure, technology. How would tariffs
(09:17):
affect your business? How do they affect your business?
Speaker 8 (09:20):
Well, there are two ways in which it could affect
our business. One is directly, you know, because we are
in the telecom space and we do procure hardware equipment
which we deliver as part of the overall service to
our customers. So it does impact there, but that impact
is very negligible and insignificant. So I'm literally not worried
(09:42):
about the direct impact. What worries me is even so
much so not the tariffs but the volatility, the uncertainty
leading up to it. So from the time President announced
and then there was a pause and now there is
a bit of a you know of a withdraw So
we don't know when this turbidity is going to you know,
(10:04):
going to stop and when there's going to be more clarity.
So when we see this uncertainty with our customers, the
delay in decision making is something that is likely to
push you know, revenue or although as of no I
have not seen this in our autobook as yet. And
that's the reason why I use the word cautiously optimistic,
(10:24):
right that we would like to be cautious to see
what's that that conversation that's happening in our customer boardrooms
and how we can, you know, help them.
Speaker 7 (10:34):
Maybe I can jump in here, career just thinking about
the relationships between India and the US. I'm wondering how
you're seeing additional growth opportunities for your business. I know
you've told me the US is an important part for
your business. You've done two transactions here recently. Just talk
to us a little bit about how you're seeing that develop.
Speaker 8 (10:52):
Yeah, US is a very very important market for US,
and we want to grow US to to billion dollars
of our business. We are currently about little under two
and a half billion dollars for now and US kind
of totals up to around seven hundred sound fifty. So
we'd like to take it to to billion dollars in
(11:12):
the very near future. So we've invested both in terms
of product capabilities for the business, go to market capabilities,
feet down street and everything that we can.
Speaker 9 (11:22):
Do to grow the business.
Speaker 8 (11:24):
So therefore, our strategy is still steadfast and we will
look for both organic and inorganic opportunities to grow our
footprint in the US.
Speaker 9 (11:34):
So we are committed to that.
Speaker 5 (11:36):
Kare what is the M and A outlook like, because
at least in the US we had a pretty big
media deal announced today with Charter and cocks. Are you
looking at any potential M and A activity?
Speaker 8 (11:49):
We are continuously scanning if I may, and there are
you know, targets.
Speaker 9 (11:54):
That we will look at.
Speaker 8 (11:57):
If you if you look at our business, our data
business has two chunky parts. There's a core connectivity part
of the business, our traditional telecom point to point connectivity
and you know and Ethernet and you know international these
lines and then something in cable that we that we have.
So that's you know, roughly about half of our business
and the other half is a digital portfolio which we
(12:20):
call the overlay services, where we use the connectivity as
a foot in the door and then provide valuated services
to our customers, whether it is whether it's the customer
interaction you know, suite offerings that we have, whether it's
IoT move cloud security, you know, and all of those
offerings that we do.
Speaker 9 (12:39):
It is in that space that I would.
Speaker 8 (12:41):
Be we would be really looking for any potential targets
that could either I would say, bolt on and fill
any portfolio gaps I may have in my product offering
or even help us with the go to market you
know offering. I'll give you an recent example when we
boxed Switch, and it was a primarily a US based business.
Speaker 9 (13:05):
Switch gave us two capabilities.
Speaker 8 (13:07):
One we were It gave us the media transmission business
in the US and that was very very important for us.
Plus it also gave us the media production you know capability,
so we could backward integrate and offer more, you know,
more product offerings to our customers, and we could take
that globally as well. So it made a lot of
(13:30):
sense for us to get a footprint in the US
geography and then use that capability to even go global.
So assets like that will be of interest for us,
and we continuous to scan for them.
Speaker 7 (13:41):
Yeah, Kabir, just wondering based on the fact that you're
based in India. We've seen some geopolitical tensions there recently,
not the only place in the world where we're seeing
that flare up recently. Just wandering from a CFO perspective,
how do you navigate these kind of geopolitical risks and
how far has has risked management become more important to us,
(14:01):
to you and also sort of how does that work?
Speaker 8 (14:06):
Uh you know, I mean, I would say we have
a very very robust risk management framework and today it
is geopolitical risk. Yesterday it was something called COVID pandemic,
and not more than a decade ago, it was a
Layman collapse, and you know, and the crude oil crisis.
Speaker 9 (14:23):
So we've seen and every time when this event.
Speaker 8 (14:26):
Happens, we call it a one off event, a black
Swan event. But I guess all organizations you know sailed
through this. They have a resilient, resilient PNDL and balance
sheet and resilient culture that helps them navigate through this.
Speaker 9 (14:42):
And we are no different.
Speaker 8 (14:43):
And we are a global organization, so therefore we are
not insulated to only domestic you know issues. Every morning
we wake up with something happening, you know, across the world,
the geopolitical conflict.
Speaker 9 (14:55):
As when we.
Speaker 8 (14:56):
Spoke and I mentioned, uh, it never has ever it
happened that we had three cable systems go down at
the same point in time in the last twenty year
history ever, which happened about nine months ago, and that's
because of the Red Sea conflict that.
Speaker 9 (15:08):
You actually, you know, actually see.
Speaker 8 (15:10):
So we have woken up to the reality that despite
these pressures, we need to continue to be you know,
serving our customers, providing them you know, diverse paths, giving
them alternatives so that their business you know, keeps running.
That's the reason why they come to come to us
in the first place. So when we chop out plants,
we of course look at the likelihood and the impact
(15:32):
of any of these events occurring, and depending on the severity,
either we are acting on them.
Speaker 9 (15:37):
Right now, having a plan A plan B plan.
Speaker 8 (15:39):
See ready, or or if not, you know, keep watching
that space if it develops in any way disadvantaging us
and have mitigation plans.
Speaker 2 (15:50):
We're speaking with Kabira Ahmed Shakir, CEO of Taught Communications. Kabir,
you have this perch as CFO of the company that
operates or has business i should say, and close to
two hundred countries around the world, so you understand where
there's weakness, where there's strength. What are you hearing from
customers right now? This isn't exactly discretionary spending that they
(16:12):
do when it comes to it, When it comes to telecom.
But are there areas of the world where you're seeing
strength or the areas of the world where you're seeing
weakness right now?
Speaker 8 (16:23):
Look when when we look at any of these things
impacting like the tariffs. Of course there's a prediction on
especially in the US, the very recent goldment As Sects
report of last month suggests that spend levels are going
to be pretty static compared to last year. So and
the probability of CAPEX coming down is at high as
(16:45):
forty five percent. So you see all those you know
statistics coming in and I can understand why because of
the uncertainty and if people, if customers need to rewire
their supply chains, then they would rather preserve the cash
for that than you know spending on important but non
urgent you know it spends. So that's one dilemma. The
(17:06):
other conundrum that they actually have is clearly there is
a pomo I mean, with the with the buzzword of
AI going through every you know, organization is also looking
at our investing in AI and our future proving our business.
So therefore not investing and not spending on that space
is not an option either. So that's the kind of
(17:27):
conundrum that the customers are in and and we are
helping our customers to look through this bring clarity as
soon as possible so that they do not you know,
suffer the consequences of an intercision on and not spending
in time.
Speaker 9 (17:43):
So it's a it's a tricky situation.
Speaker 8 (17:45):
So I'm not saying it's easy, but you see that
consistently across you know, industries quite often with network it
so happens. You know, tim is if it ain't broken,
why fix it. You know, that's the kind of attitude
you know people have. So it's very normal too to
try and push back that spend, but as I said,
(18:07):
with a coming in, it's very difficult for them to
push back for too long.
Speaker 2 (18:11):
Yeah, certainly a theme that we saw when it came
to the most recent round of earnings reports from companies
here in the US that that AI spend is continuing.
Kabir Amtshakier, thanks so much for joining us CFO of
tak Talk Communications. Also a big thank you to Nina Trentman,
senior editor at Bloomberg News. Check out the CFO briefing
by Nina Trentman. You can sign up at Bloomberg dot
com slash newsletters, or go directly there at Bloomberg dot
(18:32):
com slash cf.
Speaker 1 (18:35):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty And we.
Speaker 2 (18:53):
Got a special guest for our Drive to the Close today.
That's Craig Moffatt. He's founding partner and senior analyst at
Mofitt Nathan and he joins us from Craigs. Deal such
as this in the year twenty twenty five, could it
face regulatory scrutiny?
Speaker 10 (19:09):
Hey Tim, good to be here. You know, you wouldn't
think so Cox and Charter are adjacent. They don't directly
compete with each other. Charters pricing strategies in their go
to market strategy is pro competitive and pro consumer. So
you wouldn't think that this deal would face any challenges
(19:29):
even at the state level, because they'll also have to
get approvals from the Public Service Commissions and public utility
commissions in the individual states involved. You wouldn't think it
would see any challenges, but again, things have been sort
of unpredictable when you get DEI considerations and things like
that that can hang up. Otherwise, big deals that are
(19:50):
ready for approval, you do have to be at least
some somewhat circumspect about what kind of process it will face.
Speaker 2 (19:57):
Okay, that's a deep tease for the Horizon Frontier conmerce
we're going to have in a few minutes. But we
want to stick on Charter and Cox right now because
that is the big deal of the day, right.
Speaker 5 (20:05):
And Craig, so you joined the show in January. I
think Carol Masser was here. It wasn't me. I'm filling
in for her. But your top pick for twenty twenty
five was Charter Communications. So I'm wondering, how has your
view changed on the company in light of today's deal news.
Speaker 10 (20:22):
Well, you know, nice to see, Emily. I think it's
actually not changed at all. And in fact, I suspect
that the reason that Cox was finally willing to agree
to a merger after twenty years of being asked, or really,
I guess almost twenty years of being asked, they went
private back in two thousand and eight.
Speaker 9 (20:42):
If I recall is that.
Speaker 10 (20:46):
The Charter momentum, and in particular the Charter momentum in
wireless and the converged offering of wireless and broadband together
was so compelling that I think Cox probably said we're
better off to be part of the Charter family. After
saying no to mergers for twenty years, maybe it's finally time.
Speaker 4 (21:09):
Is it time?
Speaker 2 (21:10):
Because of what has happened in this industry over the
last twenty years, the rise of streaming, the cord cutting
that we're seeing, the decline of the secular decline of
you know, what's known as the cable bundle, and just
the disruption that we've seen, I mean in your career
has been pretty remarkable.
Speaker 10 (21:30):
It has, but I don't think that's really behind it.
You know, it's easy to probably the younger listeners don't
remember when when cable was about video. Cable's core product
hasn't really been video for fifteen years. Cable's core product
has been broadband for at least fifteen years, and so
(21:52):
it's really all about broadband. What's changed is that we're
now seeing broadband and mobile service being offered together in
this kind of what is typically called within the industry convergence.
But which they're trying to sell to customers is just
sort of connectivity everywhere. The CEO of Charter was speaking
(22:13):
at the Mouffet Nathanson Conference for US yesterday and was
saying that he thinks when a customer pulls out of
their driveway, they don't really care who's providing the service
in the driveway, who's providing the service in the house,
and who's providing the service outside of the house. They
just want to make sure it works in all those places.
And so what they're trying to do is convince customers
(22:37):
that we can give you a better deal at a
much lower price and give you the best connectivity everywhere.
And it's working for Charter, and that's I think why
the stock is up almost sixty percent year to date,
it's been over the past twelve months. I think it's
just people are starting to see the fruits of that strategy.
(22:58):
And I think that's again precisely what Cox saw. And
Cox has an agreement with Verizon for carrying wireless traffic
that they are not able to put over Wi Fi
over over their own network the same as Charter does,
but it's not as good a deal. And so I
think A lot of this was driven by we want
to be on the Charter deal that has better economics
(23:21):
and better terms than the deal that we have with Verizon.
Speaker 2 (23:24):
Is this going to keep working for Charter Communications given
the competition that they're seeing from the wireless companies that
are now doing broadband into homes. I mean, I have
Verizon or Charter offered where I live, and I can
get FiOS for forty bucks a month for a really
fast connection because it competes with Charter right there.
Speaker 10 (23:45):
Yeah, you're exactly right, Tim. That's why you've seen pressure
on the broadband subscriber numbers from Charter and Comcast and
the rest of the cable industry. The answer to that
that the cable operators have been pushed is, well, a
broadband competitor may be able to save you twenty dollars
(24:07):
a month on your on your broadband subscription, but we
can save you seventy five dollars a month on your
wireless subscription if you take it all together, and you
will end up being much better off financially and have
a better product. And that's a wireless service that actually
while the cellular portion runs over the Verizon network, it
(24:30):
actually beats Verizon in network testing results because the time
that it's not on the Verizon network is actually running
faster than the Verizon network does. And so it is
by far the best, the lowest price deal available to customers.
And that's what the cable operators are leaning into.
Speaker 5 (24:52):
So what's the plan here for infrastructure and building out
just more infrastructure for Internet the home. Are the combined
companies now chartering cocks going to be building out more fiber?
That's kind of the infrastructure that delivers the fastest connection here, right.
Speaker 10 (25:10):
Well, then there's a narrative that that fiber to the
home or what the industry is called FTTCH is better
than cable infrastructure. It's not really. They are largely the same.
In fact, overseas, there have been all these cases that
have demonstrated that cable actually has more fiber than fiber
to the home does. That is, a packet is delivered
(25:32):
over cable spends more time on fiber than it does
even on a fiber to the home network. So the
networks are largely interchangeable today. There simply isn't really an
advantage to having something that's called fiber over something that's
called a cable network. So it really comes down to price,
(25:53):
and the most differentiated part of the offer is actually
in the mobility side.
Speaker 2 (25:57):
Hey, Craig, before we let you go, promise we do
the thirty seconds at least on Verizon winning FCC approval
for its nine point six billion dollar acquisition of Frontier
Communications Parent Inc. Why do in your view did this
deal go through?
Speaker 10 (26:11):
Well, I think it's pretty clear it went through because
they agreed to end all their DEI programs at Verizon
and the deal was approved minutes after that and so,
and that had been the hang up that the FCC
had had.
Speaker 4 (26:27):
With the deal.
Speaker 10 (26:30):
But it's also that deal is interesting because why is
Verizon buying Frontier. They're buying Frontier because they want a
bigger wireline footprint.
Speaker 9 (26:40):
Remember they were.
Speaker 2 (26:41):
Craig unfortunately got to leave it there. Craig Moffatt over
at mafat Nathansen.
Speaker 1 (26:45):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Apple Karplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (27:00):
All right, well, we are watching all the economic data
that we are getting very closely, including real estate data.
Housing starts increased in April, as a pickup in multi
family home construction more than offseted decline in single family
dwellings caused by elevated inventory. Back with us as Katie Hubbard,
she's executive vice president of Capital Markets at Walton Global.
It's the privately owned asset and real estate investment company.
(27:22):
It's got about four point four billion dollars in nearly
eighty one thousand acres of land under management in the US. Katie,
always good to have you on the program. If you
think about where we are right now versus where we
are when we last spoke to you back in March,
what is the biggest shift that's taken place from your perch?
Speaker 11 (27:40):
Yeah, Tim, thanks so much for having me. I would
say the biggest shift is just weak spring selling season.
Typically thirty seven percent of all sales by public homebuilders
are made in February through May, and they just have
not had the traffic. And it's really because of elevated
borrowing costs that we're seeing. Mortgage rates are still high,
and then the uncertainty and the is keeping people from shopping.
Speaker 5 (28:03):
Katie, I want to get your take on the economic
data that we got out today housing starts, because I'm
looking at it, we have multi family home construction like
apartment buildings jumped, but then single family home construction decreased.
What do you make of this divergence? What is it
telling us about the overall housing economy right now?
Speaker 11 (28:25):
Yes, I mean the public homebuilders are really doing what
they can to protect their balance sheets, so they're not
wanting to overbuild with the weak spring season, so they've
really pulled back on their housing starts. Typically they're going
to be starting about three homes per community across the nation,
and you're at less than two point seven homes per community,
So they're just building less because they don't want to
(28:47):
be stuck with inventory that they can't sell. Because when
they have inventory sitting there, they're having to slash prices
to keep the units going. And then there just continues
to be a pent up demand in the rental market
because of the lack of affordability in the single family market.
Speaker 6 (29:01):
It's keeping the developers hungry to build. And on the multifamily.
Speaker 2 (29:06):
Katie, let's go a big picture and talk about a
theme that has emerged over the last few years and
especially emerged during this last presidential election cycle, and that
has to do with housing affordability. Housing availability touched on
it when you talked about rental and home prices as well.
Are these homes going to get built in places where
homes don't traditionally get built. I mean, that was one
(29:27):
of the ideas that was presented during the campaign by
Vice President and then candidate Jade Vance was building on
federal lands. In your view, is that how the US
is going to tackle this housing problem?
Speaker 6 (29:39):
That is a great question.
Speaker 11 (29:40):
So we're just coming off of the ULI conference where
they're talking a lot about affordability and how we're going
to be able to build homes that not only are affordable,
but also attainable for people that aren't looking for, you know,
affordable homes with government assistants. Really what's happening is developers
are moving out into like further out into the suburbs
where they can build and the land is more affordable.
(30:01):
The challenge then, of course, then you don't have the
utilities availabilities, you don't have water sewer to be able
to build big master planned communities here and lies the
problem with the government. Yes, does own five hundred million
acres of land that they could just say, hey, you
can build on this, But then you have to have
public private partnerships and it has to be a win
win where everybody along the value chain can make money.
(30:23):
And then if you look at the land that the
government owns, it's the wrong land and the wrong location
without the availability to actually build on it.
Speaker 6 (30:31):
Physically, you can't build.
Speaker 11 (30:32):
And then the people who would be potentially living in
places where the government owns land, we're talking you know,
the desert, the mountains, there's no jobs there.
Speaker 6 (30:41):
So that just it sounds good, but it's just not
a viable option.
Speaker 2 (30:44):
Yeah, I heard there are three things that are important
when it comes to real estate. Location, location, location, I've
heard that before. So then is the answer in up
zoning or rezoning? Is the answer in changing local laws
in municipalities to allow more dense home homes and perhaps
getting rid of parking requirements and really concentrating on areas
(31:04):
where the economic activity is and making sure that people
can find available housing in these areas. Is that the
key that really is.
Speaker 11 (31:12):
We need deregulation to make permitting easier, to make the
densities better for developers so that they can make their
numbers pencil. The challenges just in those core in those
urban core areas where that we're talking about, there's not
a lot of availability of land. And I'm sure if
somebody came, you know, I wanted to build an affordable
multi family development on a park in.
Speaker 6 (31:33):
Your neighborhood, you wouldn't want that.
Speaker 11 (31:34):
So you've got, you know, the not mind backyard mentality
at Uli they were talking about, now they've got a
yigbee yes, and God's backyard where they're actually looking at
taking religious institutions that maybe are abandoned, are not being utilized,
and putting affordable housing in there. So there's a lot
of you know, discussion about ways to make it work,
and one of the ways is through just engineering. Being
(31:56):
able to build homes at a faster pace through through engineering.
So there's that is coming in. I would say, if
you've looked at Boxable, that's you know what you can
like unfold the house in three days.
Speaker 6 (32:07):
Doing that on a larger scale with bigger buildings.
Speaker 5 (32:10):
I'm wondering how tariffs and the trade war impact that.
What you're talking about specifically, like the speed at which
home builders can actually build and source raw materials, what
are you seeing right now about how tariffs are impacting
the housing supply chain?
Speaker 11 (32:27):
Yeah, so today it's actually better than we thought. The
pause on the tariffs has helped right now, you're looking
at about two to four percent that has actually impacted
the building costs today and homebuilders just are not passing
that on to the end users. They were anticipating a
six point eight percent increase in materials this year, but
(32:47):
it's actually been less than expected.
Speaker 2 (32:49):
What's the what's the biggest issue? Is it lumber from Canada?
Is it gypsum from Mexico?
Speaker 4 (32:54):
What is it?
Speaker 6 (32:55):
You know, it's really it's all of the above.
Speaker 11 (32:58):
It's you know, you've got steel, you've got appliances coming
from China is a big one. The houses that they're
building today, they have purchased materials in the past, so
it's really looking forward. And that's another reason why they've
slowed down their starts, is because they don't really know
what the prices of those goods are going to be
for those future homes, and we really need that to
stabilize across the board.
Speaker 6 (33:18):
But yes, it's all the things that you mentioned.
Speaker 4 (33:19):
Him, Katie, What have you heard?
Speaker 2 (33:21):
And you know, we talked about this a few months ago,
but I want to get an update from you on this.
What have you heard recently from the home builders about labor,
especially with regard to the immigration crackdown that we've seen
in the US. Our home builders finding enough people to
work for them, and then are their sub contractors finding
those folks too.
Speaker 11 (33:38):
Yeah, what's interesting is that they're not really reporting a
shortage in labor. They're actually having some of their trades
contact them and asking for more work just because there
has been a slow down in construction across the board,
So that has not really affected them that much.
Speaker 6 (33:52):
Yet. What where you're going.
Speaker 11 (33:53):
To see that affect the market the most is in
the fifty unit in below multifamily market because the people
that are now not immigrating to the US or have
left are typically the renters that are renting those those
smaller multifamily houses.
Speaker 5 (34:09):
Before we let you go, we have just about a
minute left, but I have to ask about mortgage rates
because Trump has been pressuring the Federal Reserve to cut
rates faster. Does the housing market need an acceleration in
the path of cutting rates? How much do we have
to see rates come down?
Speaker 11 (34:28):
I mean, definitely the sweet spot is sub six percent.
There's so many people that are on the sidelines, you know,
waiting and hoping hearing that rates are coming down. Even
when the Fed does cut rates, though that doesn't typically
affect the thirty year fix. It's really tied to the
tenure treasury, and that is really tied to inflation. So
sticky inflation is keeping the tenure high. At six point
(34:48):
sevent eight is the thirty year fix today. We really
need the tenure to get down to about three point
seventy eight for the rates to hit below six. So
we don't see that happening this year or next year,
but that would definitely help.
Speaker 2 (35:00):
Katie always good to check in with you. Appreciate you
taking the time and joining us on this Friday afternoon.
Katie Hubbard, she's executive a vice president of capital markets
over at a Walton Global. A reminder, they've got about
four point four billion dollars and eighty one thousand acres
in land throughout the US under management.
Speaker 1 (35:17):
This is the Bloomberg Business Weekdaily podcast, available on Apple,
Spotify and anywhere else you get your podcasts. Listen live
weekday afternoons from two to five pm Eastern on bloomberg
dot com, the iHeartRadio app tune In, and the Bloomberg
Business app. You can also watch us live every weekday
(35:37):
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