Satellite TV service provider Dish Network and wireless carrier T-Mobile US are reportedly in talks for a merger, which could be the latest in a wave of consolidation in the media and communications industry.
The two sides are said to have agreed that Dish CEO Charlie Ergen, will become the chairman of the merged entity, while T-Mobile CEO John Legere will be appointed as the CEO of the combined companies, The Wall Street Journal reported Wednesday.
The talks were described to the newspaper as in "the formative stage," with no guarantee that a deal will be finally done. Key issues such as the purchase price and the mix of cash and stock that would be used to pay for the deal are still unresolved, people familiar with the matter told the newspaper.
The deal makes perfect sense, wrote Jan Dawson, chief analyst at Jackdaw Research, in an email. T-Mobile and Dish ran the risk of becoming the lone single-service providers left in the market, with everyone else combining TV, broadband and wireless, he added.
Charter Communications said last month it plans to acquire Time Warner Cable and Bright House Networks in a deal that, if approved, would create the second-biggest cable operator in the U.S. AT&T is also awaiting approval for its planned deal for Dish rival DirecTV, which aims to create a leading provider of content across mobile, video and broadband platforms. The combined company aims to cover 70 million customer locations by its broadband expansion and be a stronger alternative to cable with a better customer experience.
Dish has previously had ambitions to enter into the telecommunications market, when it bid against SoftBank in 2013 to purchase Sprint Nextel. SoftBank eventually won and acquired Sprint. Dish also made a failed pitch for Clearwire.
Dish and T-Mobile could not be immediately reached for comment on the WSJ report.
While T-Mobile has a growing subscriber base and network but not enough spectrum, Dish has lots of spectrum and no network, so their assets are very complementary, Dawson of Jackdaw said. The merger would also help overcome some of T-Mobile's lack of scale in comparison to its larger competitors like AT&T and Verizon.
Dish saw its pay-TV business flagging in the first quarter, closing the quarter with nearly 13.8 million pay-TV subscribers, down from over 14 million at the end of the first quarter of 2014. It had approximately 591,000 broadband customers at the end of the quarter. T-Mobile added 1.8 million subscribers in the first quarter, which was its eighth consecutive quarter of net additions of over 1 million customers.