Dish Stock Rises on T-Mobile Speculation

Report Says Satellite Giant Approached Deutsche-Telekom

Dish Network stock rose more than 3% ($1.21) Friday after a report said the satellite giant had approached T-Mobile USA parent Deutsche Telekom about a possible merger with the wireless carrier.

Dish closed at $37.3 per share Friday, up $1 or 2.7%, but the stock had risen as much as 3.3% ($1.21 each) to $37.84 after a report in Bloomberg News said the second largest satellite television service provider in the country had approached Deutsche Telekom. Citing unnamed sources, Bloomberg said Dish approached Deutsche Telekom about a deal before April 10, the day the German telecommunications giant sweetened its bid for U.S. wireless carrier Metro PCS. According to Bloomberg, any deal for T-Mobile USA would happen after the Metro PCS deal closes and “only after verifying that a separate deal with Sprint-Nextel isn’t feasible.”

While Dish declined to comment, a pursuit of T–Mobile USA would be in line with Dish chairman Charlie Ergen’s wireless spectrum strategy. Dish has snapped up about $3 billion in wireless licenses over the past several years and launched an unsolicited $5 billion bid for Clearwire’s spectrum in January.  While the Clearwire deal appears to be on the skids – the WiMax company exercised an $80 million loan agreement with its majority shareholder Sprint-Nextel in February, a move that Dish had earlier said would cause it to withdraw its bid. 

T-Mobile USA has about 33.4 million subscribers in the U.S. and a large chunk of spectrum, which could be used to supplement Dish’s planned wireless broadband network. Dish has said repeatedly that it would seek a partner to build out its broadband offering, which could cost billions of dollars to construct.

Dish has also fueled speculation by amassing a cash horde of about $10 billion over the past year, partly through several recent bond deals, which it said could be used in part to fund spectrum buys.  Reports have speculated that Dish could use that money for everything from a potential merger with DirecTV (unlikely due to regulatory constraints), with smaller wireless carrier Leap Wireless or for a special dividend to shareholders.