DISH Network Corp (NASDAQ:DISH) has apparently been talking with Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) about a merger with its subsidiary T-Mobile USA. ValueWalk speculated that this could happen back in July, and now the possibility appears to be even stronger.
Bloomberg reports today that DISH Network Corp (NASDAQ:DISH) Chairman Charlie Ergen approached Deutsche Telekom with an informal merger offer for T-Mobile USA. That deal was said to be made sometime before April 10, which was when Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) was said to have sweetened its deal for MetroPCS Communications Inc (NYSE:PCS) to merge with T-Mobile USA. That sweetened deal was so good that even John Paulson, a MetroPCS shareholder who opposed the original offer, decided to vote in favor of it.
According to Bloomberg, Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) may still consider the proposal from DISH Network Corp (NASDAQ:DISH) after the deal with MetroPCS Communications Inc (NYSE:PCS) closes. However, the German telecommunications giant may only consider the deal with DISH if the proposal from Sprint Nextel Corporation (NYSE:S) falls through.
DISH Network has been trying to get into the wireless industry for some time. It made an unsolicited bid for Clearwire Corporation (NASDAQ:CLWR) in an attempt to steal it away from Sprint Nextel Corporation (NYSE:S), which is also interested in buying it. However, Clearwire dipped a second time into financing provided by Sprint Nextel. It was supposed to be part of the buyout deal between the companies, although Clearwire had not officially chosen Sprint’s offer.
All of these deals and mergers are part of a larger trend within the telecommunications industry. Smaller carriers are looking to larger carriers for support, while larger carriers look for opportunities to gobble up the wireless spectrum owned by smaller carriers like Clearwire Corporation (NASDAQ:CLWR).
Meanwhile DISH Network is just trying to get a foot in the door as it attempts to diversify the services it offers by moving beyond satellite television. If DISH Network Corp (NASDAQ:DISH) is able to come out of these telecom mergers with a deal with any wireless carrier, it will be able to bundle wireless service with its satellite TV service. The company’s satellite TV business has basically become stagnant, so adding wireless service would enable DISH to keep growing.
