Sprint (S) Inks Deal to Acquire 33% Stake in Jay Z's TIDAL

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U.S.national wireless carrier Sprint Corp.S is forging ahead in the content-driven services market. On Jan 23, 2017, Sprint announced that it has decided to acquire 33% of TIDAL, the global music and entertainment platform owned by rap artist and entrepreneur Jay Z.

As per the deal, TIDAL and its artists will make exclusive content available only to current and new Sprint customers (45 million). Moreover, Jay Z and TIDAL's other artist owners will continue to run the service as before. Sprint Corp.'s CEO Marcelo Claure is expected to join TIDAL's board of directors. Notably, Tidal presently offers access to more than 42.5 million songs and 140,000 videos, through its service available in more than 52 countries.

However, the companies didn't specify which of TIDAL's content and entertainment services would be made available to Sprint subscribers. Additional information on exclusive offers and upcoming promotions from Sprint and TIDAL will be revealed soon in the upcoming days.

The pact between Sprint and TIDAL will draw more customers to both platforms by offering them exclusive access and hence will help in strengthening the direct relationship between artists and fans. The innovative TIDAL platform, combined with Sprint's award-winning reliable network and best value for unlimited data, talk and text, will deliver a first-of-its-kind experience for music fans.

The financial terms of the deal have not yet been disclosed by either of the companies. However, according to a report by financial information website,MarketWatch, Sprint is expected to pay $200 million which would increase the valuation of TIDAL to $600 million. The deal also reportedly includes a $75 million per year marketing fund to go toward landing and promoting exclusive content from artists.

Drive Toward Digital Ad and Content Market

Such steps by Sprint toward digital media and the content-driven market came as a response to other U.S. wireless carriers that have already clinched similar deals. U.S. telecom behemoth Verizon Communications Inc.'s VZ deal to purchase Yahoo! Inc.'s YHOO core assets,including its search products, digital content brands, and advertising and analytics assets will create a major player in the mobile media and advertising space. However, this deal may be in jeopardy after Yahoo's data breach reports.

If AT&T Inc.'s T decision to acquire media giant Time Warner goes through, the combined entity will become a major player in the consolidated telecom-media space.

Following Donald Trump's victory in the U.S. election, speculation is rife in the telecom space that the new presidency may pave the way for a merger between T-Mobile US TMUS and Sprint.

We believe such business expansion and customer addition plans have helped Sprint to outperform the Zacks categorized Wireless National industry's growth over the past three months. The stock returned 32.66%, beating the industry's gain of 11.75% over the same time span.

Hence, Sprint currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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Yahoo! Inc. (YHOO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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