Satellite TV service provider Dish Network Corp. and T-Mobile US Inc. are merging in a deal that could spark more consolidation in the telecommunications industry. News reports suggest that Dish and T-Mobile are in talks and close to reaching an agreement about how the merged company would be structured.
Early reports suggest Dish CEO Charlie Ergen would rise up as the new company’s chairman of the board and T-Mobile CEO John Legere (pictured above) would assume the role of CEO of the combined company. Beyond that, the details are scarce. The rumor mill is quiet when it comes to a possible sale price. Neither T-Mobile nor Dish was immediately available for comment.
A Winning Bid?
We turned to Jeff Kagan, an independent technology analyst, to get this reaction to the headline-making merger talks. He reminded us that T-Mobile has tried to merge with different wireless carriers over the last several years and every attempt has failed. Indeed, both AT&T and Sprint tried to buy the company but were stalled by federal regulators.
“This potential merger between Dish Network and T-Mobile USA may be the one that wins approval,” Kagan said. “The reason is it will not transform the wireless industry. Dish is not a wireless carrier, so only the ownership of T-Mobile will change hands. At this early stage I think the chances are much better for a deal like this to be approved.”
If the merger is announced and if it is approved, how could it impact Dish and T-Mobile? If news reports are accurate, Legere would remain at the helm of the wireless carrier, so Kagan doesn’t anticipate the company losing any momentum.
Mobile TV Moves
“Dish Network has quite a bit to gain. Traditional television, whether that be cable TV or satellite TV, is quickly changing,” Kagan said. “It is moving toward the IPTV model which AT&T U-Verse and Verizon FiOS have introduced. Without a deal with a wireless company like T-Mobile, Dish will limit its future growth potential.”
On the other hand, if Dish scoops up T-Mobile it will pave the way for the company to deliver television over wireless technology, Kagan noted. The end result: consumers can watch programming on any device, at any time and from any place. It’s a mobile TV play that many have long predicted would hit the mainstream.
Of course, T-Mobile is not the only telecommunications company interested in partnering with Dish. Kagan noted that AT&T has its eyes on a $49 billion DirecTV acquisition -- DirectTV and Dish are rivals -- and that deal looks like it will meet with federal regulatory approval. What’s more, Charter Communications announced a $67 bid to acquire Time Warner and Bright House Networks.
“This is the future of the television space as it rapidly reinvents itself. This is the same threat every cable television company faces today as they lose market share,” Kagan said. “That's why I think regulators will be much more likely to approve this deal.”