Dish Network Corp. is in talks to merge with T-Mobile US Inc.,
people familiar with the matter said, a deal that would accelerate
a wave of consolidation across the U.S. media and communications
industries.
The two sides are in close agreement about what the combined
company would look like, with Dish Chief Executive Charlie Ergen
becoming the company's chairman and his T-Mobile counterpart, John
Legere, serving as the combined company's CEO, the people said.
Tougher questions about a purchase price and the mix of cash and
stock that would be used to pay for a deal remain unresolved, the
people said. One of the people characterized the talks as at "the
formative stage," and an agreement ultimately might not be hammered
out.
If completed, the deal would be the latest multibillion-dollar
combination in traditional television and communications industries
being upended by the Internet. T-Mobile rival AT&T Inc. is
close to wrapping up its $49 billion deal for Dish rival DirecTV
that will create the country's largest pay TV company. Meanwhile,
Charter Communications Inc. recently announced a total of $66
billion in deals that would roll up Time Warner Cable and Bright
House Networks to create the second-largest cable operator.
A deal would likely be very large. T-Mobile has a market
capitalization of about $31 billion, a little below Dish's $33
billion.
A Dish deal with T-Mobile would combine the country's
second-largest satellite TV operator with its fourth-largest
wireless carrier. It also would address major strategic issues for
both sides.
Dish lacks the robust broadband service that cable companies can
lean on to offset a declining TV business. It also has amassed
billions of dollars of wireless licenses but hasn't built the
cellular network needed to put them to use. T-Mobile's wireless
service would help address both needs.
T-Mobile, meanwhile, has added subscribers at an
industry-leading rate over the past several quarters, but still is
dwarfed by much bigger rivals AT&T and Verizon Communications
Inc. Dish's wireless licenses would give T-Mobile a path to
boosting the capacity of its network.
T-Mobile has 39 million retail subscribers. Dish has 13.8
million satellite TV customers and 591,000 Internet
subscribers.
Deutsche Telekom owns 66% of T-Mobile and has for several years
been looking to either sell the company or merge it with
another.
One significant uncertainty is Mr. Ergen, who has held talks
with companies across the wireless and satellite industries in
recent years without completing a major deal. It bid openly—and
unsuccessfully—for wireless carriers Sprint Corp. and Clearwire
Corp. two years ago and has earned a reputation as a deal maker who
is tough to get to closing.
Still, Dish has consistently expressed interest in entering the
wireless industry. It has been amassing licenses to use wireless
airwaves for several years. Earlier this year, it worked with two
smaller firms to bid $13.3 billion in a government auction of
wireless airwaves, second only to AT&T's $18.2 billion.
T-Mobile has transformed itself from the weakling of the
wireless industry into its fastest-growing carrier. Under Mr.
Legere, T-Mobile acquired regional rival MetroPCS in 2013, made
strides in improving the quality of T-Mobile's network, and was the
first carrier to do away with two-year contracts. It also began
paying subscribers to switch carriers and soon began adding
customers at a rapid clip. In the first three months of the year,
it was the only major U.S. carrier to add phone customers, and
T-Mobile is now on track to pass rival Sprint and become the
country's third-largest wireless carrier by subscribers.
T-Mobile spent much of last year in talks to be acquired by
Sprint. Those talks fell apart after federal regulators—insistent
on preserving four national wireless carriers—repeatedly signaled
they would block a deal.
That opened the door for Mr. Ergen. In May, Mr. Ergen said, "We
admire what John and his team have done at T-Mobile," referring to
Mr. Legere, "and certainly we follow what they do."
Write to Ryan Knutson at ryan.knutson@wsj.com, Thomas Gryta at
thomas.gryta@wsj.com and Shalini Ramachandran at
shalini.ramachandran@wsj.com
Access Investor Kit for Deutsche Telekom AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0005557508
Access Investor Kit for AT&T, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US00206R1023
Access Investor Kit for Charter Communications, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US16117M3051
Access Investor Kit for Deutsche Telekom AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2515661054
Access Investor Kit for DISH Network Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US25470M1099
Access Investor Kit for DIRECTV
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US25490A3095
Access Investor Kit for Time Warner Cable, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US88732J2078
Subscribe to WSJ: http://online.wsj.com?mod=djnwires