Dish, T-Mobile US talk merger, wireless spectrum a key factor
By Greg Roumeliotis, Alina Selyukh and Malathi Nayak
NEW YORK/WASHINGTON (Reuters) - Just four months ago, T-Mobile US Inc Chief Executive John Legere warned consumers that results of a U.S. airwaves auction "should scare the hell out of you" because winning bids by Dish Network Corp and bigger phone companies threatened competition.
Now Legere is in talks to merge T-Mobile US Inc TMUS.N and Dish Network Corp (DISH.O: Quote), said a source familiar with the matter who requested anonymity to discuss the confidential negotiations. A decisive factor is how the partners would use the spectrum Dish has been buying up over the years.
T-Mobile would leapfrog its biggest rivals Verizon Communications Inc (VZ.N: Quote) and AT&T Inc (T.N: Quote) to have the second largest stash of airwaves behind the No. 3 provider Sprint Corp (S.N: Quote), which has struggled to build out networks, said Recon Analytics analyst Roger Entner, who saw irony in the merger talks.
"Everybody is an opponent until you're bedmates," said Entner. "(Dish CEO) Charlie Ergen went and bought spectrum like there's no tomorrow because there is no tomorrow without spectrum."
Dish and T-Mobile have in the past entertained a potential deal, which would be the latest in a wave of tie-ups in the telecom and pay-TV industries as companies look to offer more services for customers.
Earlier this year, Ergen said he was "impressed" by the wireless carrier and Legere said it made sense for his company to team up with Dish. The satellite provider could offer up to $40 per share in cash and stock for T-Mobile, according to an early estimate by Macquarie analyst Amy Yong.
The merger talks are at an early stage and important aspects such as a price and structure have yet to be determined, the source said. Ergen has in the past walked away from other deals at the last minute.
Dish in recent years has amassed spectrum, radio frequencies that carry the growing amounts of data flowing through devices, without building out infrastructure to offer its own wireless service. The company recently launched an online streaming video service, Sling TV, to offset the loss of pay-TV subscribers. Continued...