Dish's Ergen: Collapse of Sprint/T-Mobile talks 'increases' our wireless options

Dish Network (NASDAQ: DISH) Chairman Charlie Ergen said he remains open to a partnership with T-Mobile US (NYSE:TMUS) or another wireless carrier. He also said that Sprint's (NYSE: S) reported decision to abandon merger talks with T-Mobile increases Dish's options for entering the wireless market.

On Dish's second-quarter earnings conference call, Ergen said Dish executives have not yet "had a chance to sit down and discuss it internally. We remain interested in working to enhance our overall business." He said reports that Sprint abandoned its pursuit of a deal with T-Mobile because of regulatory opposition "increases" what Ergen likes to call Dish's "optionality" to get into wireless.

T-Mobile and parent Deutsche Telekom were poised to reject Iliad's $15 billion bid for 56.6 percent of T-Mobile because they saw it as too law, according to reports from the Wall Street Journal and Bloomberg. Meanwhile, the Journal also reported, according to an unnamed source, that Iliad does not see any need to raise its offer following the collapse of talks between Sprint and T-Mobile.

However, a Reuters report yesterday said Iliad is working with Dish, Cox Communications, Charter Communications (NASDAQ: CHTR) and others to improve its offer for T-Mobile.

Regarding that kind of a scenario, Ergen said that "there's always people who are going to help us and we're willing to take a lot of help." He noted that "we are not experts in the wireless business today."

"We always are learning stuff, and if people can help us and a business deal makes sense, that's something we'll consider," he added.

Ergen also reiterated that it is "relatively unlikely" that Dish will try to build out its spectrum by itself or just sell its spectrum. He said it would be a "personal failure" if Dish failed to get into the mobile market, but that if Dish could not do so "we wouldn't be hesitant at that point" to sell its spectrum.

Ergen said Dish's "dream" remains to get into the wireless industry, provide more choices for consumers, "be disruptive, be innovative and to enhance the video business we have today."

For now, it appears T-Mobile will be going it alone in its battle against AT&T Mobility (NYSE: T) and Verizon Wireless (NYSE: VZ). T-Mobile CEO John Legere recently said that the carrier does not need to make a deal to be successful in the short to medium term but that in the long term the wireless industry is a "scale game" and that Verizon and AT&T are "hugely more powerful from a standpoint of scale and capital."

New Street Research analyst Jonathan Chaplin wrote in a research note that T-Mobile "will likely face some pressure," but that "there are other credible bidders/partners that should preserve some bid premium. AT&T and Verizon would have fared better in the event of a deal, with Sprint in limbo and bleeding subs; now they will have to contend with what are likely to be aggressive moves from Sprint."

T-Mobile's management "are effectively going to have to continue to run it as a standalone entity," Espirito Santo analyst Andrew Hogley told Bloomberg. "If it's going to have a viable, long-term future, they need to increase scale. The only way to do that is to invest."

Sprint could come back to a deal with T-Mobile, but it likely would not be until after 2016. "Sprint could revisit a bid for T-Mobile," Credit Suisse analysts Joseph Mastrogiovanni and Michael Baresich wrote in a research note. "Assuming the reports are correct that Sprint will end its pursuit of T-Mobile due to regulatory hurdles, it leaves open the possibility that Sprint could find the regulatory environment more amenable under a new administration. Historically, Republicans have had a more favorable outlook on consolidation than Democrats."

For more:
- see this Dish earnings call
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)

Related Articles:
Rumor Mill: Iliad working with Dish, Cox, Charter and others to improve T-Mobile bid
Analysts: The benefits of an Iliad/T-Mobile deal are hard to see
Analysis: Iliad's $15B bid for control of T-Mobile puts pressure on SoftBank, Sprint to make a deal
France's Iliad makes $15B bid to purchase majority of T-Mobile US
T-Mobile's Legere: We don't need to make a deal to be successful

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