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A T-Mobile-Dish Deal Could be the Ultimate Marriage of Convenience

Dish and T-Mobile have both tried to date other people, but after those efforts failed, they could be each other's best remaining option.

Asa Mathat

A deal between Dish and T-Mobile is akin to two people who hook up because they are the last ones left in the bar at closing time.

Both had their eye on other combinations but saw their efforts foiled. And more than anything, neither company wants to go home alone.

Plus, while not the perfect catch, each partner has its good parts. T-Mobile is an aggressive, fast-growing upstart in wireless, while Dish has deep spectrum holdings. Together, they can offer a combination of services that neither was able to do solo.

Both companies have long sought merger partners, with Dish having previously sought to buy Sprint, and T-Mobile having tried to sell itself to AT&T and to merge with Sprint. Dish was outmaneuvered by SoftBank, while regulators shot down T-Mobile’s deals with AT&T and Sprint. Dish had also approached rival DirecTV for a possible tie-up last year.

A Dish-T-Mobile deal, though, is unlikely to encounter the same degrees of regulatory scrutiny that T-Mobile encountered in those prior efforts. A Dish deal would maintain four national wireless carriers and arguably strengthen the No. 4 wireless carrier while the other two transactions would have removed a competitor from the market.

The Wall Street Journal reported earlier Wednesday that the two companies were in early-stage talks on a deal that would see outspoken CEO John Legere running the combined company, with Dish chief Charlie Ergen serving as chairman.

Ergen, a gambler as both hobby and profession, has been continuing to amass spectrum even without having a clearly outlined strategy for how it would be used.

A T-Mobile transaction would effectively answer that long-running question.

One big uncertainty, though, is whether the combined entity would have access to the cash it needs in a very expensive business that demands a consistent, huge investment in network improvements.

Both Dish and T-Mobile have been perennially on the list of tech’s most eligible bachelors. Dish’s core video business has been weakening for years, and without access to broadband that it can sell, its prospects haven’t been appealing. So Ergen has been steadily stockpiling wireless spectrum, presumably in the hopes of either flipping it or using it as bait to sell his entire company.

Dish’s video business, which boasts 14 million subscribers, does have some value for T-Mobile, since it would give the company a new revenue stream. And Ergen has been experimenting with Sling TV, an “over-the-top” service that delivers TV over the Internet and can be used by customers who don’t subscriber to Dish (or T-Mobile).

T-Mobile, meanwhile, has been gaining subscribers due to an aggressive turnaround effort spearheaded by Legere. But T-Mobile, for all its successes, is still far smaller than AT&T or Verizon in wireless and lacks other services to bundle (such as TV or high-speed Internet). Verizon and AT&T both offer TV in some regions, while AT&T is in the process of acquiring Dish’s satellite rival, DirecTV.

But a hookup won’t solve all of the combined companies’ issues. Neither company offers high-speed wireless to the home, though Dish has at times talked about using its airwaves to offer a type of broadband service known as fixed wireless.

A T-Mobile representative declined to comment. Dish representatives were not immediately available for comment.

Additional reporting by Peter Kafka.

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