ATandT Considering Pricey Dish Network to Solve Spectrum Woes: Report
AT&T, stung by its failed bid for T-Mobile, may buy Dish Network to solve its pressing spectrum needs, but it could come at a high price, according to reports.
AT&T, further strapped for spectrum after its failed bid for T-Mobile, reportedly may consider purchasing Dish Network, but it could be costly.
In a Jan. 16 report, Bloomberg said buying Dish could come at "the highest premium in more than a decade."
AT&T's nine-month pursuit of T-Mobile caused it to lose considerable ground to primary competitor Verizon Wireless. AT&T's failed bid not only depleted its savings account of a $4 billion break-up fee, but it was forced to hand over some spectrum to T-Mobile as part of its sorry-that-didn't-work-out package.
To boot, while AT&T was working with federal regulators and testifying to the necessity and benefits of the proposed deal, Verizon was busy inking deals with Comcast, Time Warner and Cox Communications to acquire unused spectrum.
While AT&T held an upper-hand of sorts during its years of exclusively offering the Apple iPhone in the United States, Verizon, Sprint and others now offer the game-changing device. In addition, AT&T finds itself facing a competitor in Verizon that's not only the industry's largest, but now has 56 percent more 4G spectrum than AT&T, according to the report.
"Verizon outfoxed them during the T-Mobile process," Mike Brell, a money manager at Frost Investment Advisors, told Bloomberg. "The balance of power has shifted to Verizon in the past few months."
With AT&T being pressed to support its expansive iPhone base, among other data-hungry devices, some have suggested that MetroPCS or Leap Wireless could be possibilities, though a Dish acquisition would face far less regulatory oversight-which, after the beating AT&T took from the Federal Communications Commission (FCC) regarding the T-Mobile deal, could be enticing, even if the price is not.
According to Bloomberg, Dish, following FCC approval, plans to transfer airwaves it purchased from DBSD and TerreStar into mobile-device spectrum worth $9.4 billion. At the $50 a share that AT&T would have to pay-a "reasonable price," per Alpine Mutual Funds, says the report-"Dish's equity would be valued at $22.3 billion, and AT&T would have to assume its $4.9 billion in net debt."
"Dish would be a good option for AT&T [as] the carrier is spectrum-starved and it needs to ramp up fast," Endpoint Technologies analyst Roger Kay told eWEEK. "But the market is already primed for that scenario. AT&T won't find any bargains."
Another option, short of an acquisition, would be to strike a spectrum-using deal with Dish.
AT&T officials, announcing on Dec. 19 that they had ended their bid to purchase T-Mobile, said they had entered a roaming agreement with T-Mobile parent company Deutsche Telekom. They also noted that the company had spent more money on network investments over the last four years than any of its competitors and that AT&T would continue to invest and add capacity to meet customers' needs, though they would need the cooperation of policy makers to do so.
"First, in the near term, [regulators] should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC," AT&T CEO Randall Stephenson said in a statement. "Second, policymakers should enact legislation to meet our nation's longer-term spectrum needs."
The mobile industry, he added, could do much to help improve the U.S. economy if companies were able to "react quickly" to customer needs and market forces-an opinion he'll no doubt hold to as AT&T considers its next move.