Merger talks between Dish Network (NASDAQ: DISH) and T-Mobile US (NYSE: TMUS) have reportedly stalled over disagreements to do with valuation and deal structure, raising questions over whether a deal will be reached this year or ever.
The US’…
Merger talks between Dish Network (NASDAQ: DISH) and T-Mobile US (NYSE: TMUS) have reportedly stalled over disagreements to do with valuation and deal structure, raising questions over whether a deal will be reached this year or ever.
The US’ second-largest DTH and fourth-largest wireless players respectively would want to come to an agreement within two to three months so they can focus on their strategies for the 2016 spectrum auction, Bloomberg cited people familiar saying, adding that delays have made this timeframe unlikely. The companies need to be sure whether they would bid as one company or separately.
While Charlie Ergen’s Dish has already amassed, but not deployed, billions of dollars of spectrum, T-Mobile will need more to continue to expand. The wireless carrier controls only about 12% of the sector’s spectrum capacity, significantly less than larger rivals AT&T and Sprint.
The Federal Communications Commission’s anti-collusion rules will prohibit the companies from talking to each other publically in the quiet period leading up to the auction. This is set to take place in Q1 next year although, in light of the commission’s postponement last week of a discussion of auction procedures, some investors believe it will be delayed.
According to the report, T-Mobile parent Deutsche Telekom has told Dish what kind of deal it wants, but the satellite TV operator has yet to commit. Any deal would reportedly see Dish pay partly in stock, causing German concerns that Dish’s shares will lose value if its spectrum is put to use in a network.
Deutsche Telekom and Dish have both declined to comment on the report.
Both Dish and T-Mobile have said they have other options if a deal between them does not eventuate.
Meanwhile, the FCC is reportedly set to reject the US$3.3bn in spectrum bidding credits claimed by two Dish affiliates at the AWS-3 auction.
