Dish Network Corp. has reportedly been meeting with various financing institutions in an effort to secure between $10 billion and $15 billion to boost the cash portion of its acquisition bid for telecommunications carrier T-Mobile US.
Unnamed sources familiar with the matter revealed that the balance of the potential business deal would be settled using Dish Network shares. Deutsche Telekom AG, which owns 66 percent of T-Mobile U.S.'s company shares, would be left with a large minority stake if the deal is closed.
As of the moment, Dish has a market capitalization of almost $34 billion while T-Mobile U.S. has a market value of approximately $31 billion.
The two firms have allegedly been in talks over a possible merger of the second-largest satellite TV operator and the fourth-largest carrier in the country. While the terms of the merger have not been disclosed for confidentiality purposes and no agreement has yet been finalized, Dish's search for financing means the merger talks are making progress.
Dish has accumulated an extensive portfolio of spectrum, the most important component of wireless networks, which carry the growing amount of data flowing through mobile devices. The company purchased $13.3 billion worth of wireless spectrum in a U.S. auction early this year, without building any infrastructure to put the spectrum to extensive use.
Dish has recently introduced its low-cost Sling TV, an online streaming TV service, to counter the saturation of pay-TV consumers. Many industry experts have estimated the value of Dish's wireless spectrum to be worth almost $50 billion, which could be used for the deployment of a 4G LTE wireless network.
Meanwhile, T-Mobile U.S., led by CEO John Legere, has lately rebounded from years of market losses, all thanks to its cut-price deals, advertising and wireless plans including the Uncarrier plans that offer more flexibility in contracts. However, the customer gains are threatening the carrier's margins, and the company has now been reportedly seeking to purchase spectrum from other rivals.
If the merger between Dish and T-Mobile U.S. were to become successful, the latter would be able to utilize the spectrum to strengthen and expand the T-Mobile network, and Dish in return would have access to the platform for its streaming TV services.
Based on the financial performance of the last 12 months, the combined entity of Dish and T-Mobile U.S. would likely gather almost $45 billion in revenues and $1.5 billion in net profit. The joint entity would also be able to install high-quality LTE services, such as enormously fast video transfer and boosted application upload and download speeds.
If the merger is closed, the sources believe that Legere would take up the position of CEO for the merged company.
Photo: Dave L | Flickr
