Sunday, April 14, 2013

Dish Network Rumored To Be Interested In A Deal With T-Mobile

Dish Network Chairman Charles Ergen apparently met with Deutsche Telekom about a deal that would allow the satellite television content provider to buy T-Mobile and bundle its wireless service with Dish Network to give Dish customers a chance to purchase wireless service from the carrier. Ergen was said to have made his approach to the German telco prior to April 10th when the parent of T-Mobile raised its bid for MetroPCS. Now that the surviving company will have less debt after the merger, major MetroPCS shareholders are now supporting the deal which will be voted on by stockholders on April 24th.

With Deutsche Telekom committed to completing the merger with MetroPCS, sources say that the German telecommunications company might consider a deal with Dish Network after the MetroPCS deal closes and after the company sees if a merger with Sprint is possible under the current regulatory environment. If Dish has to wait for the MetroPCS deal with T-Mobile closes to buy the latter operator, it will be looking to purchase a public company with 42.3 million customers. The T-Mobile-MetroPCS deal is structured as a reverse merger in which the smaller MetroPCS will end up as the surviving company which will probably get a name change to T-Mobile.

Ergen has built up a treasure chest of $10 billion, some of which was the result of selling debt. The FCC has already hinted that they would like to see Dish use some of its spectrum used for satellite transmissions to start a new wireless company.The rest is up to Ergen who has been quite methodical about this whole process. Regulators would much rather have Dish acquire T-Mobile than Sprint because this way a major U.S. carrier doesn't disappear. 

Dish is also involved in Sprint's deal to buy the remaining shares of network provider Clearwire that it doesn't own. Japanese telecom Softbank's $20 billion deal to buy 70% of Sprint has given the nation's third largest carrier the money necessary to bid $2.97 a share for the slightly less than 50% of the shares owned by Sprint. Dish is bidding a higher $3.30, but with Clearwire already more than 50% owned by Sprint, Dish has a very tough task ahead of it. The reason for going after Clearwire is once again, networks, pipelines and spectrum. Clearwire has been drawing down chunks of financing from Sprint that is convertible into more Clearwire shares, pretty much ending Ergen's chances of buying Clearwire.

Source: Bloomberg

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