Having been thwarted in its most recent attempts to enter the domestic mobile space, Dish Network said it was still mulling over its options, hinting that perhaps T-Mobile US could be its new target.
Speaking with analysts following the release of its second quarter financial results, Dish Chairman Charlie Ergen said the company is still interested in pursuing a position in the wireless industry, citing the strong market.
“So we’re still very bullish on the wireless side of the business,” Ergen said in response to a question regarding its stance after having failed to purchase Sprint Nextel and Clearwire. “It is becoming a more cost-competitive industry.”
Ergen went on to explain that with the continued merger and acquisition activity sweeping across the wireless market, Dish remained in a prime position to take advantage of its spectrum holdings and cash position to become a player.
“Certainly, I think the recent transactions of Leap to AT&T and SoftBank’s success with Sprint and Clearwire will make both those companies more formidable in terms of going forward and so forth,” Ergen said according to a transcript from Seeking Alpha. “Obviously, when you put networks together, to the extent that you can do that with an existing operator, or do that in a network sharing way, that’s probably a preferred way to do it. And so I think there’s going to be some opportunities for us when we look at that, and we’re just going to make good rational decisions. And again, I think you can make good rational decisions when you have full knowledge. And we spent the last five years gaining an awful lot of knowledge, and I think that ultimately that will pay us dividends as we decide strategically how we move forward.”
Dish currently has control over 30 megahertz of spectrum in the 2 GHz band that it was awarded by the Federal Communications Commission late last year. Dish had attempted to pair that spectrum with Sprint Nextel and Clearwire through potential acquisitions earlier this year that both fell short. In addition to the spectrum holdings, Dish is also sitting on nearly $10 billion in cash and securities in which to make a move.
Ergen explained that while it was unable to gain control over Sprint Nextel or Clearwire, it was still looking at potential partnerships to utilize its spectrum holdings with the newly formed Sprint, or perhaps a partnership with T-Mobile US.
“I think that opportunity – certainly, T-Mobile from a – this is a company, you could put that together with Dish in any number of ways, including an acquisition or a merger, and that’s probably not possible with the other wireless providers. But having said that, I think the other wireless providers do provide us some pretty good options. And I think in an ironic sort of way, Sprint becomes a really kind of an interesting potential partner for us as well, and I think people just assume maybe that, that’s not the case. But the fact is, we actually understand Sprint and Clearwire probably better than we do any of the other wireless providers. Certainly, I think Sprint and Clearwire understand us pretty well and certainly understand that – certainly understood the synergy and the strategic reason why we are an attractive option. I think we were just too late to the party.”
T-Mobile US seems open to such a partnership, with its CEO last month telling The Wall Street Journal he was “intrigued” by the vision laid out by Dish Network Chairman Charles Ergen, which included closer integration between satellite television and mobile communications.
“When he made his bid and made his presentation to Wall Street about what his vision was, in my opinion it was very high level, and people didn’t puke all over it,” John Legere said in an interview with The Wall Street Journal. “I’m intrigued by Charlie’s vision of this integrated capability.”
LightSquared
Ergen also noted that while the company remains interested in getting its hands on LightSquared, and more specifically LightSquared’s 1.6 GHz spectrum assets that remain in limbo. Dish earlier this year reportedly put in a $2 billion bid to acquire LightSquared, which has been attempting to figure out a solution to reduce interference issues between its 1.6 GHz spectrum license and some ground-based GPS services.
“It’s obviously a long-term play,” Ergen noted. “It’s obviously something that has a lot of hoops to jump through in terms of from a regulatory point of view and in terms of a technical point of view on the spectrum. So it’s challenged, and if you could take a long view with that particular spectrum in my opinion.”
Complicating the LightSquared option, however, is a lawsuit filed by Harbinger Capital Partners claiming Ergen has enacted a fraudulent scheme in attempting to acquire LightSquared’s debt and thus assume control over its operations. Harbinger, which is controlled by Philip Falcone, has recently seen its control over LightSquared diminished following a bankruptcy filing.
Ergen did not seem fazed by the accusation, noting that he and Dish have both followed rules in regards to LightSquared.
“We’ll respond in the appropriate way, and we will certainly put – I will certainly personally put my track record and what I’ve done,” Ergen explained. “And I will put the flash – I will put the light on that. I’ll put the light on Dish, and we’ll put the light on Harbinger and Mr. Falcone. And we’ll let the courts and the public opinion decide who is fraudulent and who is not.”
Ergen also reiterated previous comments that at the end of the day Dish would do what was financially prudent in regards to its wireless ambitions, having said last year that the company was not “suicidal” and would not enter into a venture with no chance of survival. That could mean an eventual sale of its spectrum holdings should that outcome be most beneficial to its investors.
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