T-Mobile US and Dish Network are in talks over a possible merger, it emerged this week, with the former’s CEO John Legere named as the likely leader of the combined entity.
Citing unnamed sources, the Wall Street Journal reported on Wednesday that the two firms broadly agree on the structure of the merged entity, but have yet to thrash out other key details, including the purchase price.
The paper was unclear on whether the companies are considering a merger of equals or whether one would buy the other. In market cap terms they are roughly equal, with T-Mobile’s coming in at around US$31 billion to Dish’s $33 billion, the report said.
While Legere has been earmarked as CEO of the combined company, Dish Network co-founder and current chief executive Charlie Ergen will take on the chairman role.
Despite the clarity on job roles, talks are at an early stage and there is no guarantee a deal will emerge, the Wall Street Journal’s sources said.
A tie-up between the mobile operator and the satellite TV provider would form part of the ongoing wave of M&A activity in the U.S.
Recent high-profile deals include AT&T’s $48.5 billion acquisition of DirecTV, a rival to Dish in the satellite TV space, and the $56.7 billion acquisitio n of Time Warner Cable by Charter Communications. AT&T said recently that it expects to gain regulatory approvals for the DirecTV buy this quarter, while Charter expects to close the TWC buy by the end of the year.
T-Mobile is the fourth largest mobile operator in the U.S. and has been seeking to improve its position for some time. It agreed to be taken over by AT&T in 2011, but the deal fell through amid regulatory opposition, while plans to merge the carrier with third-placed Sprint also came to nothing, again due to objections from the FCC.
The market has moved on in the intervening years and it now makes more sense than ever for T-Mobile to bulk up by getting into bed with a TV operator.
Meanwhile, Dish Network has harboured mobile ambitions for some time. It has acquired significant amounts of spectrum over the past few years, but would clearly prefer to buy rather than to build: it failed in an attempt to buy Sprint in 2013.
Rumours of its interest in acquiring T-Mobile have waxed and waned, but resurfaced a year ago when Ergen publicly said he would consider a move for the mobile operator provided Sprint was out of the picture.
