With the T-Mobile USA merger dead, AT&T Inc. is looking elsewhere for the airwaves to support its future growth.
Speculation is mounting that DISH Network could be the answer.
In a research note last month, Stifel Nicolaus & Company, Inc. raised the question as to whether AT&T would buy DISH, the satellite TV company.
"While it certainly remains a possibility that AT&T could try to buy DISH's spectrum without buying the entire company, we believe Charlie Ergen [Dish co-founder and chairman of the board] realizes he is unlikely to ever get a better offer than from a moderately-desperate AT&T that needs spectrum and needs it quickly," Stifel Nicolaus analyst Christopher King wrote, "and with the satellite TV industry's long-term business model being more uncertain than ever, we believe it more likely that AT&T will be forced to buy the entire company."
Others also believe a combination between AT&T and DISH would make sense for AT&T, and DISH President and CEO Joe Clayton told Bloomberg West in an interview he's open to a potential acquisition once the company builds out its wireless phone and entertainment businesses.
AT&T, the second-largest wireless operator behind Verizon Wireless, cited its need for more spectrum as one of the most compelling reasons for its now defunct $39 billion merger with T-Mobile USA. DISH is reported to possess spectrum that could help AT&T meet the rising demand for wireless services and grow the company as it builds out a fourth-generation mobile LTE network. AT&T also isn't a stranger to the television business; the company served 3.6 million "U-Verse" TV customers at the end of the third quarter.
"AT&T wants to get more spectrum. They are a year behind Verizon in the LTE race," Recon Analytics analyst Roger Entner told Bloomberg. "Dish would undoubtedly be a good combination and it would solve a lot of AT&T's problems."
Incentive Auctions
Market speculation aside, AT&T is currently focused on legislation before Congress that could free up more spectrum for the wireless industry. The legislation would enable the Federal Communications Commission to auction off spectrum that would be returned by licensees in exchange for a portion of the proceeds. Such auctions could generate around $25 billion for the U.S. Treasury, according to Federal Communications Commission Chairman Julius Genachowski.
