Dish Network looking to finance as much as $15 billion for T-Mobile purchase

Dish Network looking to finance as much as $15 billion for T-Mobile purchase
Earlier this month, it was announced that both Dish Network and T-Mobile are negotiating a merger. While initial reports said that a deal was not imminent, new reports out of the Dish camp suggest that the satellite content provider has been talking to banks about financing the cash portion of the bid. These same reports state that the amount Dish is looking to borrow is in the neighborhood of  $10 billion to $15 billion. The remainder of the transaction would be paid for using Dish Network shares.

News that Dish is seeking financing indicates that the two sides are a lot closer to a deal than thought. Once financing is agreed to, Dish will have to pay the banks a fee to keep the financing available until it is either used or canceled. T-Mobile currently has a market capitalization of $31 billion while Dish is valued at $34 billion. The terms of a merger have not been disclosed.

There are some wild cards involved in such a transaction. Deutsche Telekom owns 66% of T-Mobile's shares and those familiar with the talks say that the German carrier will be left with a minority stake after the deal closes. While the company does not control T-Mobile's board, it can veto the deal with its huge stake in the U.S. carrier. The Wall Street Journal reports that Deutsche Telekom wants a premium price paid for T-Mobile considering the disruptive nature of the company. T-Mobile is also producing earnings before taxes, interest, depreciation and amortization (EBITDA) of $1 billion a year. Led by feisty CEO John Legere, the carrier has turned itself around and has become the most innovative of the nation's four major mobile operators.

Another wild card is the response of U.S. regulators. Before Sprint even made a bid for T-Mobile last year, both the FCC and the Justice Department made it clear that such a deal would not receive regulatory approval in the U.S. Considering that Dish does not compete with T-Mobile, this deal should have an easier time getting cleared.

One last thing to consider. According to the Journal, a change in control clause could force T-Mobile debt holders to ask for repayment immediately. The clause becomes effective if the change in control leads to a drop in the credit rating of T-Mobile's outstanding bonds. $20 billion of debt is affected by the clause.

source: Reuters, WSJ

FEATURED VIDEO

7 Comments

1. waddup121 unregistered

as big as that whatssapp purchase

2. theo14461 unregistered

T-Mobile has gained a huge customer base in the last couple of years. I'd like to see them succeed.

3. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

We need this to happen, so T-Mobile can continue to make more capital improvements. The big guys need more competition.

7. elitewolverine

Posts: 5192; Member since: Oct 28, 2013

Don't forget the spectrum that Dish has that they are not using that could help cell space for T-Mobile. And offer a in home land line solution at a easier cost than their @Home cost them years ago.

4. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Why would they even be interested in buying? If you dont have the money, then dnt borrow it.

6. Salazzi

Posts: 537; Member since: Feb 17, 2014

Do you buy your phone through installment plans like Verizon's Edge? That's borrowing money. Do you use a credit card? That's borrowing money. Almost every consumer in the US, borrows money. I can say with certainty that you're amongst them. Therefore, don't preach, unless you practice it first. All corporations borrow money. Money was borrowed to buy Sprint, money was borrowed by Verizon for operating and expansion expenses. When a company issues stock, and sells it, it's in essence borrowing that money (hence why it goes into liabilities on the balance sheet). The entire western financial system is built on debt.

8. elitewolverine

Posts: 5192; Member since: Oct 28, 2013

Everyone borrows money, there is not a single person that I know that doesn't borrow. If you are not on a prepaid plan, then even technically you are borrowing money, in the form of a cell service that you 'promise' to pay them.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.