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Dish's Ergen leaves door open for T-Mobile deal if a Sprint/T-Mobile effort fails

Ergen on Dish's spectrum: We're 'ready to harvest'
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Dish Network (NASDAQ: DISH) Chairman Charlie Ergen reiterated his decision not to get into a bidding war with Sprint (NYSE: S) over T-Mobile US (NYSE:TMUS), but indicated that he would be ready to move if Sprint tried to make a bid for T-Mobile and failed.

"We don't have the kind of money to, you know, go outbid Sprint for T-Mobile or outbid AT&T for DirecTV. So we have to be well positioned so no matter what happens it's all good for us, and I think we're there," Ergen said on a conference call to discuss Dish's first-quarter earnings, according to Bloomberg.

In addition to a potential Sprint/T-Mobile deal, there has also been recent speculation that AT&T (NYSE: T) could bid for Dish rival DirecTV (NASDAQ: DTV). AT&T could pay more than $100 per share for DirecTV and still find it financially attractive, Ergen said.

If regulators at the FCC and Department of Justice were to block a deal between Sprint and T-Mobile, "then T-Mobile would have strategic interest to us, yes," Ergen said. However, he added that he sees a Sprint and T-Mobile merger as a logical way to create a larger wireless competitor.

Ergen's comments echo what he said in February, when he noted that Sprint and T-Mobile would be able cut costs by merging in ways that he couldn't match, and that Sprint parent SoftBank has the financial resources to outbid Dish.

Deutsche Telekom CEO Timotheus Hoettges said he is open to a deal between DT's T-Mobile and Sprint, but said that U.S. regulators have clearly signaled their skepticism of such a deal. Sprint is reportedly preparing to make a formal offer for T-Mobile in June or July, though Sprint CEO Dan Hesse has also said that "theoretically, if such a transaction were to occur, we would have some convincing to do" in terms of dealing with regulators.

Interestingly, Ergen also said that it would "make a lot of sense" for a company like AT&T or Verizon (NYSE: VZ) to purchase Dish.

Dish controls 40 MHz of AWS-4 spectrum in the 2 GHz band and recently paid $1.56 billion for 10 MHz more of spectrum in the 1900 MHz PCS H Block auction. Now, Ergen said, we're "ready to harvest," according to the Wall Street Journal.

BTIG analyst Walter Piecyk wrote in a recent blog post that proposed changes to the FCC's spectrum screen could pave the way for a carrier like AT&T or Verizon to purchase Dish's spectrum. The FCC has proposed changes to the spectrum screen that could limit the amount of spectrum carriers can acquire, but Piecyk noted that the changes wouldn't prohibit AT&T or Verizon from acquiring Dish's spectrum.

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article

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