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