New York Reuters
Dish Network and T-Mobile US were in talks over a merger that would combine the second-largest satellite TV operator in the US with the fourth-largest wireless carrier, the Wall Street Journal reported yesterday.
Dish and T-Mobile US shares were up 8 percent and 12.8 percent respectively in premarket trade yesterday, while those of T-Mobile’s majority owner Deutsche Telekom were up 1.3 percent – the only rise for a German blue chip stock.
A deal, which has been mooted in the past, would fit with Deutsche Telekom’s stated interest in partnerships to strengthen its US business after failing to sell it last year. Such a deal would also join the current wave of tie-ups in the telecoms and TV industries as companies look to add services for customers.
Representatives at Dish and T-Mobile US did not immediately respond to e-mails seeking comment outside regular US business hours. A spokesman for Deutsche Telekom, which owns a stake of about 66 percent of T-Mobile US, declined to comment.
The two sides had agreed T-Mobile chief executive John Legere would serve as the chief executive and Dish chief executive Charlie Ergen would become the new company’s chairman, the Journal said, citing people familiar with the matter.
However, a purchase price and the structure of the deal were as yet undecided, the newspaper said.
T-Mobile has a market capitalisation of about $31 billion (R382bn), while Dish’s market capitalisation is about $33bn.
“It is clear that Deutsche Telekom is looking for future prospects in the US,” a source close to Deutsche Telekom’s management board told Reuters, adding that it had no knowledge of talks between T-Mobile US and Dish.
Dish and T-Mobile US have previously floated the possibility of a deal. Ergen said earlier this year that he was “impressed” by T-Mobile US, while Legere said it made sense for T-Mobile US to team up with Dish.
Dish, a surprise winner in the record-setting US sale of airwaves for mobile data in January, has amassed wireless spectrum and recently went into streaming TV to offset the loss of pay-TV subscribers. However, what Dish plans to do with the newly-acquired spectrum remains unclear.
T-Mobile US has been looking to purchase spectrum from smaller rivals, according to media reports.
The company has turned around years of subscriber losses with cut-price deals, marketing and wireless plans in recent quarters. While these initiatives have led to customer gains, they have pressured T-Mobile US’s margins.
Last year, Deutsche Telekom tried to sell T-Mobile to Sprint but the number three US carrier dropped its bid after regulatory resistance. French operator Iliad also abandoned its attempt to buy T-Mobile US last October.
T-Mobile US’s rival AT&T is close to wrapping up its $49bn deal for Dish competitor DirecTV, while Charter Communications is seeking to remake the US cable television industry by acquiring larger rival Time Warner Cable for $56bn.