Will T-Mobile US Inc (TMUS) be DISH Network Corp (DISH)’s Savior?

T-Mobile US Inc (NASDAQ:TMUS) is in need of the spectrum that is available in abundance with DISH Network Corp (NASDAQ:DISH). It is a tricky situation for both companies as T-Mobile needs spectrum, and DISH has no where to deploy spectrum. In the last year or so, the telecom service provider was even ready to be merged with the satellite service provider as the industry was busy in integrating. However, that was turned down by the cable firm. Now, it should deploy the spectrum so that it could protect its most valuable asset. If that has to be done, then there is only one alternative. That is to approach the third biggest telecom service provider in the United States, which could be either through the merger or by allowing it the use of the spectrum.

Options Narrow Down

T-Mobile US (NASDAQ:TMUS) is the least license holder of the airwave in the Americas among the top four. Despite that, it was able to dethrone Sprint Corp (NYSE:S) as the third biggest telecom service provider in the United States. It was to its advantage that its CEO, John Legere, used its resources very well and still gained among the bigger consumers. For instance, the company added consumers at a much rapid pace than its rivals like AT&T Inc. (NYSE:T) or Verizon Communications Inc. (NYSE:VZ). The FCC has set March 29 for the fresh sale of the spectrum. In the first place, it would buy airwaves that were surrendered voluntarily by the TV stations to resell them to mobile service providers to meet their growing demand.

In the same way, DISH Network Corp (NASDAQ:DISH) faces the threat of losing its spectrum if it failed to have 40% of its spectrum linked to the mobile devices by the turn of the next year. If the cable service provider fails to do so, then the regulator might bar the company from entering the mobile and the 4G usage on its airwaves. That meant the options were getting narrowed to limited things. As the time passes, the threat will become a reality. It is a well-known fact that T-Mobile US (NASDAQ:TMUS) evinced interest in the available airwaves of Dish in the past. Now, it is for the cable service providers to offer a plan to the telecom service provider to defend its spectrum.

More Licenses Than Telcos

DISH Network Corp (NASDAQ:DISH) has more licenses than the telecom service providers. AT&T Inc. (NYSE:T) retained its top position with 251 licenses by bidding $18.2 billion. Dish has bid for $13.3 billion for 702 licenses while Verizon Communications Inc. (NYSE:VZ) has bid for $10.4 billion for 181 licenses. T-Mobile US Inc (NASDAQ:TMUS) has only 151 licenses by bidding for $1.8 billion. If the past is any indication, television companies were surrendering their airwaves without utilizing them while the need for it among the telecom companies has increased due to the increased usage of the Internet. That was because of the mushroom growth in the smart devices including the tablet.

Therefore, it would be tough for DISH Network Corp (NASDAQ:DISH) to defend itself with such a large quantity of licenses and airwaves without entering the mobile segment. If the company attracted investors attention in the past, it was because of the hopes that it would align with one or more mobile service provider to realize its investment. That included leasing for a certain period or giving it on a rental basis. It was because of such reasons that its stock reached $80 towards the end of the year 2014. Now, it is trading less than the $50-level thus losing nearing 40%.

Only Savior

Also, investors were hoping that DISH Network Corp (NASDAQ:DISH) might be a takeover candidate after AT&T Inc. (NYSE:T) acquired DIRECTV (NASDAQ:DTV). In fact, T-Mobile US Inc (NASDAQ:TMUS) shown interest mainly because of the spectrum it has. Now, DISH does not have any alternative but to seek the merger proposal from T-Mobile. Alternatively, it should enter the mobile segment and that involves additional investment to meet the deadline. It is time for Dish CEO to rethink his position and act.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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