Sprint and T-Mobile Merger: Could Dish Network Swoop In?
T-Mobile seems to be the hottest neighbor on the block. Satellite TV provider Dish Network could step in to buy out the nation's fourth-largest wireless carrier if Sprint's plans to acquire the company don't go through.
Dish Network chairman Charlie Ergen revealed that the company is willing to swoop in if U.S. government regulators end up stifling a proposed takeover of T-Mobile by Sprint, the third-largest carrier in the United States. The comments stem from hints that AT&T has its eyes on Dish's rival, DirecTV.
"We don't have the kind of money to go outbid Sprint for T-Mobile or outbid AT&T for DirecTV. So we have to be well positioned so, no matter what happens, it's all good for us, and I think we're there," Ergen said at a first-quarter earnings report conference call Thursday.
Ergen mentioned that it's up to Washington to "pick winners and losers."
"I wasn't a very good poker player, but when a bunch of drunken fools were throwing money around occasionally, I was able to pick up the pot at the end of the day," Ergen said. "My recommendation to our board would probably be let's see what happens."
Sprint parent company SoftBank Corp. has been actively pursuing a deal to merge Sprint with T-Mobile. Sprint chairman and SoftBank chief executive Masayoshi Son in particular has been outwardly vocal about his desire to merge the No. 3 and No. 4 carriers in order to better compete with the juggernauts that are Verizon and AT&T.
"I brought the network war and price war (to Japan). I'd like to bring that to the States," Son said at the U.S. Chamber of Commerce to industry officials in March. "I would like to provide an alternative to the oligopolistic situation that two-thirds of American households can only get access to one or two providers. I'd like to be a third alternative with 10 times the speed and lower price."
"If the government wants us to have a competitive environment, you are going to make sure that the duopoly doesn't use their prowess to crush the little guys and have this sub-1 GHz spectrum be moved all to them," said T-Mobile CEO John Legere in an interview on television show Bloomberg West earlier this year.
"We're all going to need better scale and capability. The question starts to be, how do you take the maverick and supercharge it? We either need more spectrum and capability, a lot more investment, or we need consolidation."
With deeper pockets, a combined Sprint and T-Mobile company would be able to better compete in 2015's FCC spectrum auction, despite the fact that the combined subscriber base of the two would still be smaller than AT&T's alone.
The deal, however, faces stiff opposition from the U.S. government. Both the FCC and the Department of Justice's antitrust division have expressed concern about consolidating the wireless market from four to three major carriers. Prices will go up, they say, although analysts have stated otherwise. Approval from both institutions is needed for the deal to go through.
While Sprint has been keeping itself in check until the proper sentiments are gathered, inside sources have revealed that bid could be made as soon as June or July.
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