Multiple reports surfaced on Friday morning claim that T-Mobile’s American branch is considering a merger with Dish Network, the second largest satellite television provider in the US. The deal would see the two companies expanding their services onto each other’s reach and activating as a single joint company, with Dish’s Charlie Ergen as chairman and T-Mobile’s John Legere as CEO.
Talks of the deal, speculated to be worth more than $30 billion, have apparently reached the stage of formative talks, meaning that no agreement has been yet settled or at least verbally agreed according to sources of Wall Street Journal. However, there is a high probability of it being approved by federal regulators as it would fit under the spectrum screen cap used by the FCC when it judges approval of such deals.
This would be just the latest of intra-communications industry deals that have recently been speculated, after similar reports suggest that AT&T are close to receiving regulator’s approval for its purchase of DirecTV and Verizon has announced that it is going to purchase AOL last month.
Jonathan Chaplin of telecommunications research firm New Street Research claims that the deal would greatly benefit both companies. T-Mobile can expend its mobile and broadband reach by using Dish’s vast array of airwave licenses, while Dish could finally look into a decent possibility of broadcasting its television services onto a vast mobile and broadband network.
This would also create problems for Sprint, a direct competitor for T-Mobile in the mobile broadband industry. Currently, T-Mobile is the fourth largest provider of such services in the United States, behind AT&T, Verizon and Sprint; however, analysts speculate that this deal could help T-Mobile overtake Sprint for the third position.
The only reason the deal could fall at federal regulation is that by combining the airwave spectrum of both T-Mobile and Dish, the merged company would have a larger control of the United States’ wireless spectrum than top two providers AT&T and Verizon have combined.
Also, the difficulty of finalizing the deal might also be increased by Dish CEO Charlie Ergen, who has garnered a reputation as a ruthless negotiator who walked away from deals with Sprint, Clearwire or DirecTV in the past.
Other scenarios which industry analysts point out as possible would be Sprint hijacking the deal by proposing a merger with either Dish or T-Mobile. Sprint has considered similar moves in the past but has stayed out of them due to concerns relating to the regulatory process; necessity might have them risk it this time around.
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