Analysis: Dish's options narrowing to T-Mobile, DirecTV

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Dish Network (NASDAQ: DISH), having abandoned its attempt to acquire Sprint Nextel (NYSE:S) and having been outbid for Clearwire (NASDAQ:CLWR), faces a quandary: What does it do now in wireless?

Sprint shareholders will vote tomorrow on SoftBank's $21.6 billion proposal to buy 78 percent of Sprint; Dish has said it won't make another competing bid for Sprint. Meantime, Clearwire's board recommended shareholders vote in favor of Sprint's new bid for Clearwire; a vote is scheduled for July 8.

All of this leaves Dish more or less where it was in November, holding 40 MHz of 2 GHz spectrum and a small portion of 700 MHz spectrum. (Dish has also made a $2 billion bid for LightSquared and its spectrum, though it's unclear where that effort stands.)

Some analysts have suggested that T-Mobile US (NYSE:TMUS) could be a partner or potential acquisition target. Dish has reportedly had talks in the past with T-Mobile. T-Mobile declined to comment, according to the Wall Street Journal.

Dish Chairman Charlie Ergen has talked openly and on multiple occasions about his desire to get a wireless partner. "Sprint, when you look at the kind of assets we have and you look at the assets that Sprint has, Sprint has a bit more scale," Ergen said on May 9 during Dish's first-quarter earnings conference call, according to a Seeking Alpha transcript. "Sprint has a bigger spectrum position, particularly with their control of Clearwire. And so we think that's a better fit. It doesn't mean that T-Mobile is not a good fit, it just means that the price we're offering today, we think that Sprint's a better fit."

Dish declined to comment.

At the time, Ergen said Dish has multiple backup options if it lost its bid for Sprint, including included selling Dish's spectrum, selling the whole company, partnering with another wireless carrier or wholesaling capacity on its network, as LightSquared had planned to do. He said building a greenfield network and competing as a fifth national wireless player was low on his priority list. "We have to be prepared to win, and we have to be prepared to lose," he said.

Analysts see a merger between Dish and rival DirecTV as a distinct possibility, although it likely won't happen in the near future. "By process of elimination, Dish is going to be dragged kicking and screaming into what was the best option from the beginning: a merger with DirecTV," Craig Moffett, an analyst at cable and satellite researcher Moffett Research, told the Journal.

Although Dish could raise its $4.40 per share tender offer for Clearwire, analysts generally believe Dish won't prevail there.

For more:
- see this WSJ article (sub. req.)
- see this Denver Post article
- see this AllThingsD article

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