After the Sprint (S, Financial) and T-Mobile (TMUS, Financial) deal fell through, it was quite expected that Dish Network (DISH, Financial) would soon come in the scene to combine with either of the two. This is exactly what happened. According to a Bloomberg report that cited unidentified sources close to the matter, Dish’s CEO Charlie Ergen recently got in touch with T-Mobile’s parent Deutsche Telekom AG with the proposal to acquire its U.S. subsidiary.
The proposal
Ergen has not made any official bid, but has expressed the idea of joining forces with the fourth largest U.S. telecom company. Dish has not appointed any bank for advice on the acquisition. Dish looks to make a formal bid sometime after November when the wireless frequency auction is completed. T-Mobile has also received a proposal from France-based Iliad SA.
The French company offered $15 billion to gain a majority stake of 56.6% in T-Mobile. However, people familiar with the matter have said that Deutsche Telekom has rejected Iliad’s offer, and the latter is looking to partner with another entity to strengthen its bid and make it more attractive.
Dish’s long longed aspiration
The combination proposal made by Ergen is not something unusual of the CEO. He has done it several times earlier. Dish Network, which is the country’s second largest satellite-TV provider, has been trying to diversify into other lucrative business from a very long time. And the U.S. wireless telecom industry has been Dish’s preferred choice. On several occasions Dish has tried to make an entry into the mobile wireless space. In the past it made a counterbid for regional spectrum-rich Clearwire while Sprint was already in the process of acquiring the company. It also made a rival bid to acquire Sprint, when the latter was being pursued by Japanese telecom giant Softbank, who is now parent of the Kansas carrier.
Dish has been keen on entering the telecom space by partnering with one of the existing national carriers. But it’s failed every time it attempted to do so. While it’s faced difficulties, Dish did not give up on it. The company has continued to acquire wireless spectrum to become attractive to the telecom providers. This time again when Sprint gave up on its pursue for T-Mobile, Dish sensed an opportunity and grabbed it immediately. Also, it’s not the first time that the satellite provider has approached Deutsche Telecom. Dish has been in talks with the parent company for several years now.
Both Dish and Deutsche Telekom’s spokesperson declined to comment in this regard. Philipp Schindera of Deutsche Telekom said nothing other than that the company is under no obligation to sell its stake. Having said that, Deutsche Telekom considers Dish to be a better acquirer compared with Sprint as the former wouldn’t draw antitrust concerns. Sprint and T-Mobile had raised concerns among the U.S. regulators since the number of national carriers would fall from four to three. This will not happen in case of Dish and T-Mobile’s combination as the former is from another industry.
Parting thoughts
Though no official bid has been made by Dish, over the coming months it will get clear as to how serious is the company with regards to joining forces with T-Mobile. An interesting fact unraveled by a person who requested anonymity is that Softbank’s Masayoshi is still very keen on acquiring T-Mobile in the next 18 to 24 months. So Sprint hasn’t really driven away the thought of combining with the carrier. It’s just a matter of time and the equation between Sprint, T-Mobile, and Dish would get clear.
