Sitting on a cash hoard of about $10 billion and searching for a partner in the wireless industry, satelite television provider Dish Network may be interested in a deal with T-Mobile, the nation's fourth-largest cellphone carrier.
Bloomberg News reported Friday that Dish has "informally approached" T-Mobile parent company Deutsche Telekom about a merger.
Deutsche Telekom is in the midst of a reverse merger with regional carrier MetroPCS. The German telecom giant may consider Dish's proposal after the MetroPCS deal closes, according to Bloomberg, which cited unnamed sources.
Dish, which serves 14 million satellite-TV subscribers, plans to use its war chest of wireless spectrum to launch mobile broadband service, though it needs to partner with an existing carrier. Dish chairman Charlie Ergen wants to expand beyond the company's core pay-TV business as customers increasingly view video on the go and amid growing competition from online alternatives.
The company last week raised $2.3 billion in debt for purposes that "may include wireless and spectrum-related strategic transactions." That stirred speculation that Dish may sweeten a previous offer for wireless network operator Clearwire, which is majority owned by No. 3 carrier Sprint, or make a run at T-Mobile.
The offer for Clearwire was viewed as a move to bring Sprint to the table, and may have created tension between Sprint CEO Dan Hesse and Ergen. Sprint has agreed to purchase the remaining shares of Clearwire it doesn't already own.
"A deal with T-Mobile could be a more friendly situation, especially since Deutsche Telekom potentially wants to exit from the U.S. market in the longer term," said Tim Farrar, a wireless and satellite consultant with TMF Associates.
A Dish spokesman declined comment Friday.
The deal that would make most sense, Farrar said, would entail Dish trading cash and spectrum for a majority stake in T-Mobile, thrusting it into the wireless business without putting the company's satellite-TV operation at risk.
That would also leave the door open for Dish to pursue a merger with DirecTV.
"If it came down to a merger with DirecTV, they could basically spin off the T-Mobile stake to Charlie if DirecTV didn't want to be in that business," Farrar said. "That to me is, structurally, what makes most sense because it doesn't prohibit something with DirecTV downstream, which may still be a beneficial deal in terms of the synergies."