Dish Network May Merge With T-Mobile

Dish Network May Merge With T-Mobile

According to a report by the Wall Street Journal, Dish Network Corp and T-Mobile US Inc. are in talks for a merge, which would lead to a combination of the fourth-largest wireless carrier in the United States and the second-largest satellite TV operator in the country. It has been agreed by both sides that John Legere, the Chief Executive Officer of T-Mobile would serve as the CEO and Dish Ergen, the CEO of Dish would become the chairman of the combined company, as per the journal. However, there are still some factors left undecided such as the structure of the deal and the purchase price, as per the report.

The market capitalization of T-Mobile is somewhere near $31 billion where the market capitalization of Dish Network is approximately $33 billion. There were no comments made by either of the companies regarding this deal. Deutsche Telekom was also asked for a comment as they own 66% of T-Mobile US, but they declined as well. Nonetheless, news of the deal did boost up the firm’s share price by about 2.2%. According to some traders, the talks between companies are nothing new, but it seems that a deal may be coming on soon. This could be really beneficial for Deutsche Telekom.

The possibility of a deal has previously been floated by T-Mobile and Dish. Earlier this year, the CEO of Dish, Ergen had said that T-Mobile had ‘impressed’ him. On the other hand, Legere said that it made perfect sense for Dish and T-Mobile to team up together. In January, Dish had become a surprise winner in the US sale of airwaves for mobile data that had set a record. The company recently amassed wireless spectrum and also entered the streaming market for Television in order to offset the paid TV subscribers they had lost. However, it still remains unclear as to what are Dish’s plans about the newly acquired spectrum.

As T-Mobile doesn’t own a low-band spectrum, it has been suffering from a competitive disadvantage and has been trying to purchase it from smaller competitors, according to the media reports. The company has always called itself the ‘Uncarrier’ and has managed to turn itself around in recent quarters after years of subscriber losses through marketing, subscriber deals and wireless plans. While the company has definitely seen customer gains through these initiatives, they have put a lot of pressure on the margins of T-Mobile.

Deutsche Telekom has been in search of any partner that can aid it in improving profitability in its US operations. Last year, the company had tried to sell T-Mobile to the number 3 US carrier, Sprint Corp, but they had to drop it because of regulatory restrictions. Last October, Lliad SA, the French low-cost telecoms operator had also abandoned their attempt to acquire T-Mobile. T-Mobile’s competitor, AT&T Inc. is about to close its own deal with Dish’s competitor DirecTV for about $49 billion whereas Time Warner Cable Inc. is also being purchased by Charter Communications Inc. for around $56 billion.

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