AT&T considering buying Dish Network to solve its spectrum woes
While AT&T's failed 9 month pursuit of T-Mobile allowed Verizon to add more ground between it and its closest competitor, it also ended with AT&T giving up some prized spectrum to T-Mobile as part of a break-up fee that was triggered when the former pulled out of the deal due to regulatory deadlock. In addition, AT&T had to pay $3 billion in cash to Deutsche Telekom as part of that fee. During AT&T's attempt to persuade the DOJ and FCC to green light the deal, Verizon was adding spectrum from Comcast, Time Warner and Cox Communications. And despite purchasing some spectrum from Qualcomm, AT&T needs more, especially when Bloomberg points out that Verizon has 56% more LTE spectrum than AT&T.
There have been rumors that AT&T would look to add spectrum by making a acquisition of pre-paid carrier MetroPCS or by buying Leap Wireless. But that would put AT&T in the familiar place of having to get approval from the government and if AT&T had trouble buying T-Mobile, would the DOJ and FCC allow them to buy MetroPCS, especially since the pre-paid carrier has an LTE network? A purchase of Dish Network would come with a lot less regulatory hassle, something that AT&T brass would have to like.
Following FCC approval, Dish Network wants to move spectrum it had acquired from DBSD and TerreStar into mobile-device spectrum with a value of $9.4 billion. AT&T would probably have to pay $50 for Dish, which would give the company a value of $22.3 billion, and $4.9 billion in debt would have to be assumed. With the satellite company's stock currently trading at $29, AT&T would be paying a whopping 72% premium for the company, the highest premium for a tech take-over valued at more than $5 billion since 2000, according to Bloomberg.
Roger Kay, an analyst with Endpoint Technologies, said that "Dish would be a good option for AT&T [as] the carrier is spectrum-starved and it needs to ramp up fast, but the market is already primed for that scenario. AT&T won't find any bargains." Other analysts agree that AT&T needs to do something to stop Verizon from adding to the gap between it and AT&T. Recon Analytics analyst Roger Entner said in a telephone interview, "They [AT&T] are a year behind Verizon in the LTE race. Dish would undoubtedly be a good combination and it would solve a lot of AT&T’s problems."
The billion dollar question is whether AT&T would agree to pay a 72% premium to buy Dish. Company stockholders might object to paying $50 a share for a company currently trading under $30 a share. Still, things are getting desperate for the carrier as far as spectrum is concerned. That factor combined with the company's wish not to repeat the T-Mobile scenario means that AT&T executives may not mind paying so much for Dish Network as long as the deal succeeds.
source: Bloomberg via eWEEK.com
1. aquariumdude posted on 17 Jan 2012, 19:08 3 0
lol dont end up like the at&t and t mobile fiasco
11. maier9900 posted on 18 Jan 2012, 14:24 2 0
That ended bad for att and tmobile but good fot tmobiles customers who proly wouldve left if the deal was done... and isnt att trying to buy the whole world...? It seems their desperate to own everycompany and creating more problems for them and their customers rather than deal with current ones.
4. codymws posted on 17 Jan 2012, 20:02 0 4
That's just what AT&T does. Instead of solving their problems themselves, they buy another company to do it for them.
5. Nathan posted on 17 Jan 2012, 20:51 5 1
Verizon is doing the same but aren't getting the media attention.
9. MorePhonesThanNeeded posted on 17 Jan 2012, 23:36 2 1
Lol, funny. Considering Verizon spent billions developing their LTE network when others were still dabbling and talking about HSPDA+ which will be dead end tech come time LTE Advanced rolls out. Verizon played their cards well and while they are expensive they are pretty much on the bleeding edge of mobile phone network and will continue to lead the charge here in the US. Come on they bought their independence from their parent company last year and are in the black. Give it up to these guys, might be a bit dirty at times but that's why we have a voice to go after them. but they are doing their thing.
6. snowgator posted on 17 Jan 2012, 21:55 0 0
I have been fighting off AT&T U-verse for years, now, happy on Dish Network. Oh, the irony if this happens.....
7. tigermcm posted on 17 Jan 2012, 22:36 0 0
what the !@#$ is wrong with them sheesh. sounds to me that Dish would most likely get with T-mobile and AT&T will wait till its final then try and take Dish anyone else think the same?
8. Tarkio posted on 17 Jan 2012, 23:07 0 0
Unfortunately, I don't think that will work. As soon as Dish were to buy T Mobile, they would be a wireless carrier. So att would have to go thru the essentially the same process. And since it's failed already, they won't try it again.
10. bluechrism posted on 18 Jan 2012, 08:23 2 0
I hope this one goes away quickly. Dish wanted to form a partnership to get into mobile and had no intention of selling spectrum.
When all those dish+t-mo rumours were going around during the AT&T deal wiund-down i never have had the impression Dish have the capital to buy t-mo, or were looking to acquire a mobile company, but more form a partnership. I actually liked the idea of them getting with T-Mo to do LTE together - neither taking over the other, and using that Dish spectrum where it's most needed, and both getting a boost in subscribers and profits as a result.