Dish Network (NASDAQ: DISH) is in talks with banks to line up between $10 billion and $15 billion of debt financing for the cash portion of a transaction to acquire T-Mobile US (NYSE:TMUS), according to multiple reports.
The reports, from The Wall Street Journal and Reuters and citing unnamed sources, said that Dish's push to secure financing is an indication that Dish is making progress with its bid--or at least that the company thinks it is. T-Mobile has a market capitalization of around $31 billion, while Dish's stands at around $34 billion.
Reuters reported that a deal between the two companies would be more share-based than cash based, and the WSJ reported that the deal will be primarily comprised of Dish's stock.
Dish and T-Mobile declined to comment, according to Reuters.
According to the Journal, Dish and T-Mobile are talking about a deal that would leave T-Mobile parent Deutsche Telekom with a minority stake in the combined company. DT currently controls around 66 percent of T-Mobile's shares but has been eyeing a way to exit the U.S. market or reduce its stake in T-Mobile. Last year DT and Sprint (NYSE: S) parent SoftBank explored a potential merger between T-Mobile and Sprint but abandoned the deal amid regulatory opposition.
Last week the Journal reported that based on preliminary talks, it was understood that Dish CEO Charlie Ergen would be the company's chairman and T-Mobile CEO John Legere would be the CEO of the combined firm.
Some analysts have said the deal makes strategic sense and would give Dish a way to deploy its trove of spectrum, while others have said it is illogical because it will not solve T-Mobile's shortage of low-band spectrum or meaningfully expand the reach of Dish's over-the-top Sling TV streaming TV service. Some analysts are also concerned a deal would distract T-Mobile's management and blunt its momentum at a time when it has been the fastest-growing wireless carriers in the U.S.
According to the Journal, a deal for T-Mobile that involved around $14 billion in cash and the rest in stock could potentially leave DT with a stake of around 27 percent in the combined company, according to an analysis done for the Journal by Moody's Investors Service analyst Neil Begley. However, Dish might need to spend more to buy T-Mobile because $20 billion of the carrier's debt could come due in the event of a change in control that causes its credit rating to fall, Begley said.
- see this Reuters article
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)
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