Well renowned satellite TV service provider Dish Network and wireless carrier T-mobile are in discussions for a merger, which is expected to accelerate a wave of consolidation among the U.S media and communication industries.
The sources say the two sides ‘are in close agreement,’ with regard to the talks. Charlie Ergen, the CEO and founder of US satellite TV company Dish, would become chairman of the combined group, whereas the head of T-Mobile would become the CEO, says the report. There is no news on the when the deal may be closed.
T-mobile posses a clear attractiveness. For two consecutive years, it has brought in more than . 1 million customers on the success of its ‘uncarrier’ plan to 56.8 million. This February, the company boosted it overtook Sprint to take its place of the third-largest carrier in the US. Last year, the rejection of the takeover offer for T-Mobile from Iliad by Deutsche Telekom, has turned out to be something positive. Share values of T-Mobile have soared high to 49% placing its market capital at $31.1 billion. While, Dish has a value of $32.8 billion.
Jan Dawson, chief analyst at Jackdaw Research states that the deal would make a lot of sense considering the current situation. T-Mobile and Dish are running under the same risk of becoming the solo service providers in the market while almost everyone is collaborating or branching out in other fields like TV, broadband and wireless, he said. Charter Communications is working on plans to acquire Time Warner Cable, AT&T is waiting for the approval for its planned deal with DirecTV, which happens to be the arch rival of Dish. AT&T and DirecTV are focusing on goal to create a leading provider of content across mobile, video and broadband platforms. They are working to grow to 70 million customer locations by its broadband expansion and be a best option next to cable with good customer experience.
Dish’s deal with T-Mobile would bring in the combination of country’s second-largest satellite TV operator with its fourth-largest wireless carrier. This m&a could also serve as the solution to the strategic issues faced by both the companies. Dish is in need of robust broadband internet service that cable companies can depend on considering the decline in the cable business. Also, it has wireless licenses that are worth billions but until now it has not built the cellular network that can put the licenses to some use. T-Mobile’s wireless can put an end to both the needs.
Both the companies values to more than $30 billion and a deal would create another cross-platform telecoms giant like AT&T and DirecTV companies. This seems to the year of biggest mergers and acquisition. Considering the announced deal, leaving out the ones under talks, global M&A volume this year has already increased to 32% from last year to $1.85 trillion, making 2015 the second highest YTD level on record after 2007 ($2.20tn).