DISH DISH Network Corporation

By Shalini Ramachandran and Imani Moise 

Dish Network Corp. Chief Executive Charlie Ergen signaled interest in participating in potential deal-making in the wireless industry, though he maintained that the satellite operator also has a clear path to build a wireless network on its own.

On a conference call Wednesday to discuss fourth-quarter earnings, Mr. Ergen said that a recent realignment of assets between Dish and its sister company EchoStar Corp. was intended to focus the companies on their core strengths ahead of a potential deal-making frenzy during President Donald Trump's administration, which he said could be "more friendly" to mergers and acquisitions.

"There's probably going to be M&A activity out there in the future," Mr. Ergen said, and "this probably aligns the assets in a better way to participate in that."

Mr. Ergen's comments came as Dish swung to a profit and added net pay-TV subscribers in the fourth quarter. Its streaming service Sling TV powered the satellite operator's first positive period of net customer additions in seven quarters, according to Guggenheim Securities.

Analysts have been speculating that as Verizon Communications Inc. has transitioned to offering unlimited data packages, the wireless giant may look to acquire Dish to get at its hoard of airwaves. It isn't clear whether Verizon is interested; Verizon has been exploring a combination with cable provider Charter Communications Inc., The Wall Street Journal has reported.

Moreover, Mr. Ergen, Dish's founder and controlling shareholder, would have to be convinced to sell in order for a transaction to happen. He has often come to the altar only to walk away.

Other potential dance partners for Dish include Softbank Corp.'s Sprint and T-Mobile US Inc. Dish in 2015 held merger talks with T-Mobile, which is majority-owned by Deutsche Telekom AG, the WSJ has reported, though those later fell apart. All the players have held off on talks as a government auction for airwaves is underway that restricts participants' communications with each other.

Mr. Ergen predicts deal activity will pick up after the auction ends. "We're not going to drive that process because we're not the biggest company, but obviously many of the assets we hold probably could be involved in that mix."

Because Dish's core satellite pay-TV business has been losing subscribers, Mr. Ergen has spent billions of dollars over the past several years buying up airwaves to enter the wireless business. He has yet to do so.

Asked about his willingness to build a new business in his sixties, Mr. Ergen said "anytime you're passionate about something...you can get pretty invigorated."

Since Dish isn't hamstrung by old mobile technologies, Mr. Ergen said, it has a path to build a next-generation 5G wireless network that is less expensive compared with other carriers' networks, requiring fewer cell towers to offer wide coverage. He declined to estimate a cost for such a "greenfield" network buildout.

The clock is ticking for Dish. It faces a deadline next month to meet a government mandate that it build out a slice of its airwaves to cover a certain percentage of the U.S. population. Mr. Ergen said Dish is likely to miss that deadline, which means it must meet a requirement to build out to at least 70% of the covered population by March 2020.

Mr. Ergen said there is an opportunity to reduce Dish's buildout cost by working to share tower space with carriers such as T-Mobile and AT&T, who will be building more infrastructure to handle ballooning bandwidth needs. "We do not need to do an M&A transaction to meet the buildout schedule," he said.

For the fourth quarter, the company beat Wall Street analysts' expectations for subscriber growth by adding 28,000 net pay-TV customers, compared with a loss of 12,000 in the prior-year period. Some analysts were expecting losses as steep as 87,000 customers and credited growth at Sling TV for boosting the numbers. New Street Research analyst Jonathan Chaplin pegged Sling TV total customers at 1.1 million at quarter's end, while MoffettNathanson analyst Craig Moffett put the total closer to 1.2 million.

Overall Dish reported a profit of $342.7 million, or 70 cents a share, compared with a loss of $125.3 million, or 27 cents a share, a year earlier.

Revenue dropped 1.6% to $3.72 billion.

Analysts polled by Thomson Reuters had forecast earnings of 66 cents a share on $3.76 billion in revenue.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com and Imani Moise at imani.moise@wsj.com

(END) Dow Jones Newswires

February 22, 2017 16:55 ET (21:55 GMT)

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