T-Mobile, Dish reportedly in merger talks

Companies’ shares jump as market reacts to news of possible sale

For the third time in four years, T-Mobile may be looking for a buyer.

Shares in the nation’s fourth-biggest cellular provider jumped nearly 3 percent Thursday after The Wall Street Journal reported that it is in with Dish Network, the country’s second-largest satellite TV company. Dish’s stock jumped nearly 5 percent.

The deal would install T-Mobile chief executive John Legere as CEO of the combined company, while Dish chief executive Charlie Ergen would take over as chairman, according to several media reports.

It’s unclear what Dish may be prepared to pay for T-Mobile, but the satellite provider could offer up to $40 per share in cash and stock for T-Mobile, an early estimate by Macqua- rie analyst Amy Yong shows.

Dish and T-Mobile officials declined to comment.

The deal, if it happens, would be the latest in a string of cross-industry acquisitions in recent years. AT&T is widely expected to receive federal approval for its $49 billion purchase of DirecTV in the coming weeks. Verizon last month announced it was going to buy the Internet titan AOL.

Analysts said an agreement between Dish and T-Mobile wouldn’t likely be opposed by regulators. A deal would allow both companies to grow in important ways, said New Street Research analyst Jonathan Chaplin, in a research note Thursday.

T-Mobile, lagging behind rivals such as Verizon, AT&T and Sprint, would be able to

Mobile broadband expansion possible

expand its mobile broadband network with Dish’s many airwave licenses. Dish offers television programming but has few ways of getting that content onto mobile devices and the Internet, an increasingly important distribution channel as consumers flock to online streaming services.

Earlier this year, Ergen said he was “impressed” by the wireless carrier and Legere said it made sense for his company to team up with Dish. On Tuesday, while speaking with to investors Tuesday, Ergen said that if Dish did enter the wireless market, it would likely be with a partner who could help set up the towers and equipment.

Nevertheless, the biggest advantage to the deal may also be its largest liability. Combining Dish’s airwaves with T-Mobile’s would lead to the new company controlling a substantial chunk of the nation’s wireless spectrum, putting it ahead of AT&T and Verizon, data published by Recon Analytics show. Spectrum, a finite resource, enables voice and data to be carried over the air to cellphones, televisions, radios and computers.

“Adding Dish’s spectrum and video assets/expertise would clearly make T-Mobile a more formidable competitor to AT&T and Verizon,” Guggenheim Securities analyst Paul Gallant said in a research note.

Recon Analytics analyst Roger Entner saw irony in the merger talks.

“Everybody is an opponent until you’re bedmates,” said Entner. “(Dish CEO) Charlie Ergen went and bought spectrum like there’s no tomorrow because there is no tomorrow without spectrum.”

A dwindling number of providers controlling most of the nation’s airwaves could give regulators pause. And Ergen, a notoriously tough negotiator, could still wind up with no deal.

But even the rumors of an acquisition underscore how quickly the industry is responding to the growing demand for broadband services.

Dish shares rose $3.44, or 4.86 percent, Thursday to close at $74.25 on Nasdaq. T-Mobile shares rose $1.01, or 2.64 percent, to close at $39.34 on the New York Stock Exchange. T-Mobile’s majority owner Deutsche Telekom closed up 2.38 percent. Reuters contributed to this report.