US telco AT&T’s abandoning of its plans to acquire local rival T-Mobile have added weight to speculation that the spectrum-hungry giant could turn its sights onto satellite broadcaster Dish Network.
Following its decision on 19 December to withdraw a…
US telco AT&T’s abandoning of its plans to acquire local rival T-Mobile have added weight to speculation that the spectrum-hungry giant could turn its sights onto satellite broadcaster Dish Network.
Following its decision on 19 December to withdraw a potential US$39bn takeover, after intense regulatory pressure, AT&T said it would enter into a roaming agreement with T-Mobile, and pay a break-up fee of around US$4bn to the target’s owner Deutsche Telekom.
However, analysts have highlighted an impending spectrum crunch for both AT&T and T-Mobile, as demand for capacity continues to skyrocket.
The situation was further compounded earlier this year when spectrum owned by US cablecos Bright House Networks, Comcast and Time Warner Cable was taken off the market when it was sold to mobile operator Verizon Wireless for a combined US$3.6bn.
AT&T/T-Mobile’s failed deal has therefore led to reports that the two companies could look for alternative acquisitions/partnerships, notably US telco Sprint-Nextel and Dish, which over the past year has acquired a series of spectrum assets.
Dish is currently seeking FCC approval to combine the spectrum held by mobile satellite operators TerreStar Networks and DBSD North America, both of which were acquired separately out of bankruptcy protection. The company aims to use the combined 40 MHz of 2GHz S-band frequencies to deploy a hybrid satellite and terrestrial mobile and fixed broadband network.
A note posted by Stifel Nicolaus analysts on 20 December stated: “Speculation will now certainly turn to AT&T’s next move to get its hands on spectrum. Although we have no knowledge of M&A discussions between the two parties, [Dish] could very well be the next target for AT&T, in our view … While it certainly remains a possibility that AT&T could try to buy Dish’s spectrum without buying the entire company, we believe [Dish chairman] Charlie Ergen realises he is unlikely to ever get a better offer than from a moderately-desperate AT&T that needs spectrum and needs it quickly, and with the satellite TV industry’s long-term business model being more uncertain than ever, we believe it more likely that AT&T will be forced to buy the entire company.”
However, speculation surrounding AT&T potentially making a bid for either Dish or DTH rival DirecTV is nothing new, while many industry analysts have long predicted that Ergen’s asset building was merely a spectrum play.
Meanwhile, Dish CEO Joseph Clayton has been quoted saying that it could merge its spectrum assets with T-Mobile USA, or another wireless company, to compete with larger players AT&T and Verizon Wireless.
Clayton also reportedly suggested that Dish could potentially partner with mobile operator Sprint Nextel, or with WiMAX wholesaler Clearwire.
On 15 December, Dish sent a letter to the FCC to urge for a quick decision on earlier acquisitions and the waivers necessary to allow it to combine spectrum assets.
The company said that “timing is critical to Dish’s ability to move forward with its planned nationwide wireless network, and that nothing in the record should prevent expeditious approval of both the transactions and the associated waiver requests. Indeed, they present the Commission with an immediate opportunity to advance one of its highest priorities – deploying broadband networks to every American.
“The technical flexibility sought by Dish is the best course to achieving the Commission’s National Broadband Plan goals. Among other reasons, waiting for the conclusion of a rulemaking proceeding would inject years of delay and implicate spectrum bands that are not the subject of Dish’s applications.”
