T-Mobile US May Merge with Dish Network

Dish and T-Mobile in Merger TalksDish Network Corp. (NASDAQ/DISH) and T-Mobile US, Inc. (NYSE/TMUS) are negotiating a deal to combine the second-largest satellite TV operator in the United States with the fourth-largest wireless carrier. (Source: The Wall Street Journal, June 4, 2015.)

On Thursday, June 4, 2015, Dish shares opened at $74.95, nearly five percent higher than the previous close at $70.81. T-Mobile US shares opened at $40.45, nearly 4.5% higher than the previous close at $38.33. Meanwhile, shares of Deutsche Telekom AG (Xetra/DTEG), which owns about 66% of T-Mobile, opened 2.9% higher at $17.95. (Source: Reuters, last accessed June 4, 2015.)

Incorporated on April 26, 1995, DISH Network Corporation is a pay-TV provider, with approximately 14.057 million subscribers across the United States and a market cap of $34.49 billion.

T-Mobile US, Inc., incorporated on March 10, 2004, is a provider of mobile communications services. The company offers postpaid and prepaid wireless voice messaging and data services, and wholesale wireless services. The company also provides high-speed service with a range of desirable handsets and devices. T-Mobile US has a market cap of $32.15 billion and provides its services to approximately 47 million customers.

Deutsche Telekom AG is a Germany-based company engaged in the telecommunications services and information technology sectors. The company operates as an integrated telecommunications provider. It is organized into five operating segments, consisting of three geographical segments: Germany, Europe, and the United States; Systems Solutions; Group Headquarters, and Shared Services.

Yet, the early negotiations between the two companies are on the important aspects of the deal; such as a price and structure.

According to The Wall Street Journal, which first reported the news, both 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.

If the deal goes ahead, the potential transaction could be valued at more than $57.0 billion including debt.

T-Mobile has never been in a better position to enter into a merger deal, T-Mobile’s stock price has increased in the past few years, its network has improved, and it is adding new phone subscribers at a faster rate than its competitors.

AT&T, Inc. (NYSE/T) initiated a deal with T-Mobile back in 2011 which was blocked by regulators. Instead, it is now acquiring DirecTV (NASDAQ/DTV). Moreover, Charter Communications, Inc. (NASDAQ/CHTR) recently inked a deal with Time Warner Inc. (NYSE/TWX).

Last year, T-Mobile was in talks to be acquired by Sprint Corporation (NYSE/S), but those talks fell apart after federal regulators repeatedly signaled to block a possible deal.

Because T-Mobile and Dish are in different industries, it is expected that this deal could face far less opposition from regulators.