Dish Shares Unaffected by T-Mobile Speculation

Reports Say Ergen Interested, But Analyst Says Caution is Key
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Dish Network investors continued to be unswayed by speculation chairman Charlie Ergen was making moves to acquire No. 4 wireless communications company T-Mobile, evidenced by its shares falling slightly in early trading Monday.

News that Ergen, who has been hoarding wireless spectrum for the past three years, has approached T-Mobile parent about a possible combination first surfaced on Friday (Sept. 5). Dish stock was up slightly that day – it closed at $66.44 per share, up 60 cents each or 1%. Dish shares were trading at $66.22 each in early trading Sept. 8, down 22 cents each or 0.3% per share.

T-Mobile stock saw an initial 6% bump in early trading on Friday, but the shares closed at $30.67 each, up 1.5%. T-Mobile stock was priced at $30.86 per share in early trading Sept.8, up 18 cents or 0.6%.

According to a Friday report in Bloomberg News, Ergen approached Deutsche Telekom and although he did not make a formal offer, said he was open to making one in the next several months.

The news comes after Sprint Corp. said it had abandoned the ideal of a T-Mobile combination amid fears that a deal would not pass the necessary regulatory hurdles. In July, French telecom carrier Iliad made a $15 billion offer for a 56% interest in T-Mobile that was rejected as too low. Iliad is reportedly talking to other potential partners for another T-Mobile bid.

Ergen’s interest in T-Mobile is no secret. While the No. 2 satellite company has amassed a swath of wireless spectrum valued at about $17 billion, Ergen has said he would only build out the network with a partner. Last month, the Dish chairman said Sprint’s decision to pass on a T-Mobile combination as increasing Dish’s “optionality,” but wouldn’t elaborate whether that would mean he would make an offer for the carrier.

In a research note Monday, Elevation LLC media analyst Steven Sweeney wrote that the prices of both stocks reflect investor sentiment that Ergen will likely wait until after the November AWS wireless spectrum auction to make an offer, if he makes one at all.

Although an anti-collusion deadline – which prohibits participants from discussing the auction – expires on Sept. 12, Sweeney does not anticipate a last-second deal before that date. Sweeney added that a  sweetened bid from Iliad – which is not participating in the AWS auction and therefore is not restricted by the anti-collusion rules – is “more likely than a bid from Dish because [Iliad] has a window to push to try and get a deal for [T-Mobile] done while Dish is temporarily unable to bid for [T-Mobile].”

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