Wireless and Satellite Merger Landscape: T-Mobile, Sprint, Dish, DirecTV

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The fate of T-Mobile US, Inc. (NYSEE: TMUS) is uncertain. It is not an uncertainty of earnings, but one of who will own it going forward. We have written about the possibilities of a tie up between it and Sprint Corporation (NYSE: S), and there is also the growing possibility that Dish Network Corp. (NASDAQ: DISH) could make a play. We wanted to address this landscape again as well as show how the telecom landscape comes into play.

After Dish’s earnings, co-founder and Chairman Charlie Ergen left the door open to a T-Mobile US acquisition. We would be quick to point out that Ergen has openly discussed the possibilities of a partnership with T-Mobile or Sprint Corporation (NYSE: S) as a way to get a better deal than trying to partner with AT&T or Verizon.

Another ongoing possibility as well is that Dish could try to merge with DirecTV (NASDAQ: DTV). We even saw a full blown research report on this notion in October, and Ergen has recently suggested that this is a possibility as well. That research report suggests that a Department of Justice may not block this merger as rapidly as it would have in the past now that there are so many means of acquiring the equivalent of cable network channels.

It has been speculated upon before that Sprint Corporation (NYSE: S) would try to make a grab for T-Mobile US, particularly if AT&T makes a big international acquisition. Apparently the networks would be able to be integrated for the most part. It is also highly unlikely that the Department of Justice would try to block this merger. After all, AT&T and Verizon are the first two in America and number-three (Sprint) and number-four (T-Mobile US) are incredibly far behind. That being said, the DOJ did previously block AT&T from acquiring T-Mobile US.

As far as a deal between T-Mobile US and with Sprint, these are both effectively like tracking stocks now. They are both under control of foreign ownership. Company press releases show the following figures for each company:

  • T-Mobile US is subsidiary of Deutsche Telekom and provides service to approximately 34 million customers through its network; its market cap is $18.8 billion.
  • Sprint operates as a SOFTBANK subsidiary and served more than 54 million customers at the end of the third quarter of 2013; its total market cap is $27.5 billion.
  • DISH Network L.L.C., provides approximately 14.049 million satellite TV customers; its market cap is $23.3 billion.
  • DIRECTV U.S. ended the September 2013 quarter with 20.16 million subscribers, and had over 37 million in total if you account for Central America and South America; its market cap is $33.5 billion.