Analyst: Dish/T-Mobile merger would be 'Pugs Bunny,' a mismatched mix of a pug and a rabbit

MoffettNathanson analyst Craig Moffett said he does not believe that a merger between No. 2 U.S. satellite TV company Dish Network (NASDAQ: DISH) and No. 4 wireless operator T-Mobile (NYSE:TMUS) is a good match.

Calling a potential deal a "grand spectrum transaction and nothing more," Moffett wrote in a note that the merger would result in a mismatch similar to a pug and bunny rabbit; or, "Pugs Bunny," as the analyst humorously referred to it.

For one, Moffett doesn't believe T-Mobile would transform Dish's Sling TV OTT service into an effective mobile video product. 

"You can also dismiss all the rhetoric about offering video over wireless," Moffett wrote. "If Dish were to offer Sling TV exclusively on their own wireless network they would starve it of subscribers, keeping it from ever achieving competitive scale for negotiating programming agreements. That's a non-starter."

Meanwhile, the analyst said that while Dish has acquired plenty of spectrum, little of it is of the low-band variety T-Mobile needs. "As great as it sounds to imagine all of the wonderful opportunities made possible by a spectrum-rich T-Mobile, there is still the more pragmatic reality that what T-Mobile really needs is low-band spectrum, for coverage, not more mid-band spectrum for capacity," Moffett also wrote. 

On Thursday, the Wall Street Journal reported that Dish had begun to engage in long-anticipated merger talks with T-Mobile, dialog inside sources described as preliminary. 

Other investment analysts seem more intrigued by the potential impact on competitors than what a combined Dish/T-Mobile presence could render. 

For example, Mobile Ecosystem managing director and industry analyst Mark Lowenstein believes the merger could force Verizon (NYSE: VZ) to enter the cable M&A fray with its own big deal, perhaps via a deal with Charter Communications (NASDAQ: CHTR), Time Warner Cable (NYSE: TWC) or Bright House Networks. Or, Lowenstein speculated, Verizon could enter into an MVNO partnership with a big cable company for a Wi-Fi play. 

Research firm Evercore, meanwhile, believes a deal between Dish and T-Mobile would benefit cellular tower companies such as SBA Communications and Crown Castle. "We would be buying towers today as we see this combination as a positive for the group," Evercore told investors, noting that Dish would likely want to build out a rural wireless network where T-Mobile is limited.

For more:
- read this MoffettNathanson blog post
- see this FierceWireless article
- read this Forbes story

Related links:
Dish finally in talks with T-Mobile about merger, report says
Analysts: A T-Mobile/Dish deal could put pressure on Verizon and Sprint, would be a boon for tower companies
Report: Dish looking to hire CMO to help jumpstart wireless push

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