Dish Network (NASDAQ: DISH) is considering a potential bid for T-Mobile US (NYSE:TMUS) next year, according to a Reuters report, the latest product of a rumor mill churning out speculation on potential deals involving the No. 4 carrier.
According to the report, which cited unnamed sources, Dish has been looking at T-Mobile as a potential takeover target since Dish abandoned its pursuit of Sprint (NYSE:S) and Clearwire earlier this year. Dish has talked to Germany's Deutsche Telekom about a potential deal; DT still holds 67 percent of T-Mobile, which is a publicly traded company. The report said that while Dish has not yet made up its mind about whether to make a move on T-Mobile, Dish "does not intend to sit on the sidelines" if Sprint makes a bid for T-Mobile.
Dish, T-Mobile and Deutsche Telekom declined comment, according to the report.
The report comes less than a week after the Wall Street Journal reported, also citing unnamed sources, that Sprint is studying potential regulatory concerns of a deal with T-Mobile, and it might make an offer in the first half of next year for T-Mobile that could be valued at as much as $20 billion.
Complicating matters further, the Journal reported that SoftBank CEO Masayoshi Son is a driving force behind Sprint's potential bid for T-Mobile. Dish Chairman Charlie Ergen and Son got into a war of words when both were competing to take control of Sprint this spring. SoftBank won out and now owns 80 percent of Sprint, and Sprint bought its partner Clearwire.
In November, Ergen said his goal was to keep the company's wireless options open, but again did not rule out a merger or partnership with T-Mobile. "I don't really rule out anything," he said, adding, "I think acquiring a company, selling our company, merging, partnering, those are all on the table. Those are all part of optionality, right?"
Dish controls more than 40 MHz of spectrum, including 2 GHz AWS-4 airwaves, and is likely to be the lead bidder in the FCC's Jan. 22 auction of the 1900 MHz PCS H Block. Dish is also trying to gain control of LightSquared's L-Band spectrum. However, Ergen has said he would like to partner with an existing wireless carrier to enhance Dish's video offerings, and Dish has not made any firm plans yet to build a network of its own with all its spectrum.
As Reuters notes, a bidding war for T-Mobile would likely be less public than the one Dish and SoftBank engaged in for Sprint, since Deutsche Telekom would determine which company it wants to sell T-Mobile to--if any. T-Mobile, after years of losing subscribers, has rebranded itself under CEO John Legere as the "uncarrier," a strategy that has generated strong customer gains this year.
A deal between Dish and T-Mobile would likely have a smoother path in terms of an antitrust review than a Sprint/T-Mobile combination, since it would not remove a national wireless competitor from the market. On the other hand, a Dish/T-Mobile deal would not bring nearly as many synergies as combining the Nos. 3 and 4 carriers, since Dish doesn't own a network.
Analysts have said that a Sprint/T-Mobile deal would be a hard sell with regulators, who have made it clear they want to see four national carriers. Additionally, the FCC is unlikely to bless a major wireless merger ahead of crucial spectrum auctions scheduled for the next 12 to 18 months.
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