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T-Mobile's largest shareholder reportedly not interested in Dish Network merger
T-Mobile has been looking to partner with another company for years now, which would hopefully take the wireless provider’s business to the next level. A merger with AT&T almost happened some years ago, and more recently, Sprint’s name was on the Uncarrier’s list of potential business partners as well. Both of those giant mergers ended up falling through because of the FCC’s concerns of moving away from a four-carrier wireless ecosystem. But less than a week ago, we got news that T-Mobile was looking to partner with Dish Network instead of another wireless carrier.
Apparently we shouldn’t speculate too quickly on the subject, as New York Post has just learned T-Mo’s biggest shareholder isn’t too fond of merging with Dish. Instead, Timotheus Höttges, chief executive of Deutsche Telekom, is still stuck on the idea that merging with Sprint would be better for the company.
If you buy Dish, you kill the prospect of selling to Comcast.
You see, a merger between T-Mobile and Sprint would make sense if all we’re looking at is wireless spectrum/number of customers. However the FCC would like to keep our current “four main carrier” ecosystem in effect, which would be violated if the two carriers became one. That’s exactly why T-Mobile partnering with Dish Network wouldn’t be a terrible idea. Still, though, Höttges claims that merging with Sprint would present a more attractive package to Comcast, which the executive hopes will one day end up purchasing T-Mobile. Of course, T-Mobile merging with Dish would raise satellite regulatory concerns, if Comcast ended up becoming interested in the Uncarrier.
It should be noted that while Deutsche Telekom doesn’t control T-Mobile’s board, it does own 66 percent of the company’s stock.
A Dish Network merger for T-Mobile would affect the wireless industry in more ways than one.
No matter what majority shareholders believe, there’s still some valid speculation to be had elsewhere. A Dish Network merger for T-Mobile would affect the wireless industry in more ways than one, both positively and negatively. Wells Fargo analyst Jennifer Fritzsche notes that the combination of T-Mo and Dish wouldn’t solve the wireless scale issue for the combined company, which is arguably T-Mobile’s most sought after goal. If a merger happens, T-Mobile would only have enough subs to jump ahead of Sprint by a few million, which likely isn’t enough to satisfy the company. Even so, Fritzsche explains that this news wouldn’t be all bad for Sprint:
Many thought Verizon would buy spectrum from Dish Network. That is off the table with a T-Mobile merger, leaving Sprint as a natural candidate with additional spectrum to sell. With more vertical industry convergence happening, it’s hard to see Sprint not playing a role with the most spectrum of any carrier (even with T-Mobile/Dish).
Fritzsche also writes that while this wouldn’t completely upend the world of AT&T and Verizon since the two would be far ahead in terms of subscribers, a merger would perhaps make T-Mobile less disruptive and focus on profitability instead.
Certainly, no merger is to go through as long as T-Mobile’s main shareholder is against it. Looking ahead to the future, Höttges certainly has a great point – if the FCC can be convinced that a T-Mo/Sprint merger would be beneficial, Comcast would naturally take notice of the much larger company and perhaps eventually put in a bid. But as history has proven time and time again, the FCC seemingly has no interest in moving in this direction, so it looks like T-Mobile might need to find another way to bring its business to the next level.