AT&T Inc. (NYSE:T)
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With AT&T Inc. (T) walking away from its $39 billion bid for T-Mobile USA, investors are turning their attention to satellite television provider Dish Network Corp. (DISH) and its block of nationwide cellular airwaves.
While Dish has a chunk of airwaves, or spectrum, that would fit nicely with AT&T, the two companies don't appear to be best friends. Dish was one of the more vocal critics of AT&T's T-Mobile deal, and the satellite TV operator appears to have wireless ambitions of its own, making it more of a direct rival to AT&T.
Spokesmen for Dish and AT&T declined to comment.
Investors sent Dish shares more than 9% higher on speculation AT&T may be interested in buying the Englewood, Colo.-based company or snapping up its spectrum. With a $12 billion market capitalization, Dish could come at a significant discount to T-Mobile.
"Relative to the T-Mobile deal, AT&T will have a much easier path for approval if it were to buy Dish," said Tim Farrar, an analyst at research firm TMF Associates Inc. "Dish doesn't have an operating wireless network so there are none of the same concerns about competition."
AT&T has said it faces a potentially crippling shortage of airwaves, or spectrum, as customers clog the network with video and music downloads to their iPhones and tablet computers. Yet, without the T-Mobile deal it has few remaining options to help bolster its capacity.
Verizon Wireless this month scooped up nearly $4 billion in spectrum from a consortium of cable companies; meanwhile, hopes for a government auction of spectrum licenses may be years away. AT&T Chief Executive Randall Stephenson said this month that Congress and the Federal Communications Commission probably wouldn't agree on terms for a spectrum auction for as many as six years.
AT&T pulled out of the deal for the Deutsche Telekom AG (DTEGY, DTE.XE) unit after facing opposition from the U.S. Justice Department and the FCC, which both argued the merger would limit competition and could drive up prices for consumers and wireless competitors. AT&T had to turn over spectrum valued at $1 billion to T-Mobile as a condition of the deal's failure.
Dish, meanwhile, is pursuing its own wireless dreams. The company is seeking FCC approval to operate a combination satellite-and-terrestrial fourth-generation wireless network using spectrum it obtained this year and hopes to offer handsets by 2014. Getting the go-ahead from the FCC would boost the value of Dish's spectrum, which it bought for about $3 billion.
Dish also holds spectrum that complements a block of airwaves AT&T is buying from Qualcomm Inc. (QCOM) for about $2 billion, said Farrar. "It's a natural for AT&T to look at that," he said.
The company has said it is open to partnering with T-Mobile or other wireless companies, such as Sprint Nextel Corp. (S), to build a stronger competitor to Verizon and AT&T.
-By Greg Bensinger, Dow Jones Newswires; 212-416-4676; firstname.lastname@example.org