The Wall Street Journal recently reported that DISH Network Corp. DISH is currently negotiating with T-Mobile US Inc. TMUS for a possible takeover of the latter. However, the purchase price is yet to be finalized. A merger between DISH and T-Mobile US has been making the rounds for over a year in the industry circle. However, nothing concrete has materialized so far.
DISH, the second largest satellite TV operator in the U.S., has created an extensive portfolio of spectrum, the most important component of wireless networks. The company boasts a portfolio of 80 MHz of radio frequencies of different bands to be used to deploy 4G LTE wireless network in the top 100 U.S. markets. Several industry analysts have estimated the value of DISH’s wireless spectrum at around $50 billion.
We believe DISH’s attempt to enter the wireless market is a diversification strategy to counter pay-TV market saturation. The company collaborates with established telecom or tech companies to jointly establish a wireless network or monetize its spectrum holding for considerable profits. Recently, DISH launched its low-cost Internet TV service “Sling TV”.
On the other hand, T-Mobile US, the fourth largest wireless operator in the U.S., remains hot in the ongoing consolidation trend within the U.S. telecom industry. Since 2011, Deutsche Telekom, the parent company of T-Mobile US, has been exploring several options to divest its U.S. operations. AT&T Inc. T had placed the first bid for T-Mobile U.S. After a close scrutiny, the FCC thwarted AT&T’s bid stating that it seeks a minimum of four national carriers in order to maintain competitiveness.
In Jul 2014, Sprint Corp. S offered $16 billion for a little over 50% stake in T-Mobile U.S. Again the regulators stuck to their opinion. Consequently Sprint opted out from the race. In Aug 2014, French broadband service provider, Iliad SA offered $15 billion for a 56.6% stake in the nation’s fourth largest telecom operator. However, T-Mobile US’s management immediately rejected the offer on ground of inadequacy.
In 2013, DISH made an attempt to acquire Sprint and Clearwire Corp. but was prevented by the Japanese wireless operator Softbank which offered higher bids to acquire a majority stake of both Sprint and Clearwire.
As per the financial results of the last 12 months, the combined entity of DISH and T-Mobile US will garner around $45 billion of revenues and $1.5 billion in net profit. If the merger finally takes place, the joint entity will boast a significant bandwidth portfolio comprising AWS-1, 3, 4 as well as H-band spectrums. The joint entity will also be able to deploy high quality LTE services like extremely fast video delivery and enhanced application download and upload speeds.
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