Dish Said to Be in Financing Talks for T-Mobile US

U.S. satellite TV provider Dish Network is in talks with banks about funding a bid for T-Mobile US, according to a report in the Wall Street Journal. Dish is considering borrowing US $10–15 billion for the cash portion of a bid that would primarily be composed of its stock, according to people familiar with the matter. The two sides are discussing a deal that would leave Deutsche Telekom, which controls T-Mobile, with a large minority stake in a combined company. A deal between Dish and T-Mobile is not considered imminent, and it is possible that an agreement will not be reached, according to the sources. It is unclear how much Dish is considering paying for T-Mobile, which has a market value of US $31 billion and is the fourth-largest mobile carrier in the U.S. Dish, the country’s second-largest satellite TV provider, has a market value of US $34 billion.

Deutsche Telekom has been looking to divest itself wholly or partly from T-Mobile US for a while now, without success. In January, Deutsche Telekom CEO Timotheus Hoettges said that T-Mobile has no chance of catching up with market leaders Verizon Wireless and AT&T, and that its “Uncarrier” approach of relying on aggressive promotions is not sustainable in the long term. Deutsche Telekom, which owns two thirds of T-Mobile, has had to inject US $4–5 billion a year into T-Mobile to keep it going, and while the U.S. operator has been constantly increasing its number of subscribers, it has also consistently lost money. While Hoettges expressed a desire for T-Mobile to merge with third-place U.S. operator Sprint (majority-owned by Japan-based Softbank), it is clear to him and to most observers that U.S. regulators, who wish to keep the market at four major MNOs, would never approve such a deal. So reducing Deutsche Telekom’s ownership of T-Mobile by doing a deal with a non-MNO entity such as a satellite provider is a good alternative strategy, and Dish is a good prospective partner. Dish founder and CEO Charlie Ergen has been expressing interest in T-Mobile for almost a year, after having lost out to Softbank for control of Sprint. A merger could be a boon for Dish, which could enter the mobile market and offer multiple-play packages, and for Deutsche Telekom, which could reduce the financial burden induced by T-Mobile US. T-Mobile’s network would benefit from adding the mobile spectrum that Dish has been buying up. However, the two companies are reportedly only the in the discussion phase, and there are many reasons, from the financial to the personal, why it might not take place at all.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. Contact Tarifica for a subscription to the Tarifica Alert. 
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Report: Verizon in Talks to sell Wireline Assets

U.S. telecom giant Verizon is close to selling a package of assets including mobile towers and parts of its wireline business. The deals could be worth more than US $15 billion, people familiar with the matter told the Wall Street Journal. The deals will involve different buyers and could be announced as soon as this week. CEO Lowell McAdam said in January that the company was open to selling assets that would reduce its wireline footprint.

Here we have what appears to be another vote in favor of mobile service in a developed market. This divestment would allow Verizon to focus on its core wireless business, which accounts for 70 percent of its revenue. The deal would also give the company cash to help pay off the debt it incurred in buying out Vodafone’s stake in Verizon Wireless (the deal closed in February 2014) and to defray the US $10.4 billion cost of the wireless licenses it received in the U.S. federal spectrum auction that ended last week.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week or to contact the Tarifica Research department:  http://www.tarifica.com/contactus.aspx