Dish in talks to merge with T-Mobile according to WSJ

Written by on June 4, 2015 in News with 0 Comments

REUTERS/Rick Wilking

(Reuters) – Dish Network Corp is in talks to merge with T-Mobile US Inc, in a deal that would combine the second-largest satellite TV operator in the United States with the fourth-largest wireless carrier, the Wall Street Journal reported.

The two sides have agreed that T-Mobile Chief Executive John Legere would serve as the CEO and Dish CEO Charlie Ergen would become the combined company’s chairman, the Journal said.

However, a purchase price and the structure of the deal are still undecided, the newspaper said, citing people familiar with the matter.

T-Mobile has a market capitalization of about $31 billion, whilst Dish has a market capitalization of about $33 billion.

Representatives at Dish and T-Mobile did not immediately respond to emails seeking comment outside regular U.S. business hours.

A spokesman for Deutsche Telekom, which owns about 66 percent of T-Mobile US, declined to comment.

Shares in Deutsche Telekom were up 2.2 percent in pre-market trade.

“Talks are not new, but a deal may be more imminent now. This should be seen as slightly positive for Deutsche Telekom,” a Frankfurt-based trader said.

Dish and T-Mobile have previously floated the possibility of a deal. Ergen said earlier this year that he was “impressed” by T-Mobile, whilst Legere said it made sense for T-Mobile to team up with Dish.

Dish, which was a surprise winner in the record-setting U.S. sale of airwaves for mobile data in January, has amassed wireless spectrum and recently went into streaming TV to offset the loss of pay-TV subscribers. However, what Dish plans to do with the newly acquired spectrum remains unclear.

T-Mobile, being at a competitive disadvantage as it does not own low-band spectrum, has been looking to buy spectrum from smaller rivals, according to media reports.

The company, which bills itself as the “Uncarrier”, has turned around years of subscriber losses with cut-price deals, marketing and wireless plans in recent quarters. Whilst these initiatives have led to customer gains, they have pressured T-Mobile’s margins.

Deutsche Telekom has been looking for any partner that can improve profitability at its U.S. operations.

Last year, it tried to sell T-Mobile to Sprint Corp but the No. 3 U.S. carrier dropped its bid after regulatory resistance. French low-cost telecoms operator Iliad SA also abandoned its attempt to buy T-Mobile last October.

T-Mobile rival AT&T Inc is close to wrapping up its $49 billion deal for Dish rival DirecTV, whilst Charter Communications Inc is seeking to remake the U.S. cable television industry by acquiring larger rival Time Warner Cable Inc for $56 billion.

(Reporting by Supriya Kurane in Bengaluru; additional reporting by Christoph Steitz; editing by Anupama Dwivedi and Jason Neely)

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