Dish finally in talks with T-Mobile about merger, report says

After a year of speculation about a possible merger, Dish Network (NASDAQ: DISH) and T-Mobile (NYSE:TMUS) are reportedly engaged in serious talks about a transaction, according to the Wall Street Journal.

Citing unnamed sources close to the negotiations, the WSJ said the dialog has progressed enough to include some structure: Charlie Ergen, chairman of the No. 2 satellite company in the U.S., would reportedly assume the chairman's role of the combined company, while his counterpart at the No. 4 wireless carrier, John Legere, would be CEO of the combined company. 

The purchase price, as well as the mix of cash and stock involved, has not been resolved, the WSJ said. The publication said one source said the deal is in the "formative stage." It's also unclear as to who is buying who: Dish has a market cap of $33 billion, while T-Mobile's is $31 billion.

News of the talks emerges as Dish's only satellite rival, DirecTV (NASDAQ: DTV), is in the closing stages of its own $49 billion merger with AT&T (NYSE: T).

Like DirecTV, Dish needs another business to shield it from declining U.S. pay-TV revenue streams. Dish has been aggressively acquiring wireless spectrum recently and has openly declared that it will enter the wireless business, through merger or otherwise.

Under Legere's aggressive schemes, T-Mobile has been growing its subscriber base at a record pace in recent quarters. But it's still dwarfed by larger wireless rivals like AT&T and Verizon, which not only have larger networks, but are in the process of launching new video businesses targeted to their mobile users.

Acquiring Dish would not only deliver T-Mobile the spectrum it would need to bulk up its network, it could also get into the mobile video programming business, too.

Dish isn't the only pay-TV operator with wireless ambitions; a wide range of cable operators are investing in public Wi-Fi hotspots. Indeed, Liberty Media Chairman John Malone this week hinted at a Wi-Fi-based mobile service from Charter Communications and others that could fall back to Verizon Wireless' network. "The concept that Comcast, a greatly enlarged Charter and Cox could together offer a Wi-Fi-optimized connectivity service with a default to a Verizon MVNO is interesting," Malone said.

For more:
- read this Wall Street Journal story

Related links:
Analysts: Dish execs say wireless options, including wholesale or partnership, are not mutually exclusive
Report: T-Mobile, Sprint won't get extra 600 MHz reserve in FCC auction
Analysts: T-Mobile/Dish deal still the most likely M&A option for the carrier

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