The reported merger between satellite pay-TV provider Dish and telecom company T-Mobile US — said to be in talks — is soon to be official, Meridian Advisory Group (MAG) Managing Partner Shahid Khan told TheWrap on Thursday. And Khan expects the company combination to fly through the customary regulatory review.
“The odds of getting this approved are quite high,” Khan said. “With DirecTV-AT&T and Charter-Time Warner Cable deals in the pipeline, the entire pay-TV-telecoms industry is going to go through a major transformation — and the regulators will need to review them with an industry-wide perspective.”
Khan said he expects additional deals to come over the summer: “The pay-TV industry will have to consolidate … It’s going to be a land grab.”
So why does this apparently imminent deal make sense for Dish anyway? Well, for starters, the satellite provider’s numbers have been slowing down as of late, Khan pointed out. The company also needs to get with the times if it wants to complete with the evolving “quadruple play” expectations, which tacks on consumer cellular service to the popular “triple play”: home phone, television and Internet combination.
Currently, there’s a clear lacking on Dish’s end.
“Cable today is two-way communication … Satellite is predominantly one-way,” Khan explained, calling such a deal “crucial to Dish’s survival.”
Also, it’s always safer — though clearly not cheaper — to buy into an established company than launch a new one from scratch. Dish had just two options to catch up, as Khan sees it — Sprint or T-Mobile — and this proposed merger is the better match.
“A combined Dish/T-Mobile will be able to offer consumers a superior nationwide network, strong set of video content offerings, and better bundles,” he said.
Plus, the merger has a hidden competitive benefit: “Had Dish not gone after T-Mobile, Comcast might have,” Khan said, characterizing T-Mobile as a missed opportunity for the more massive cable company.
Khan also said that the deal would benefit T-Mobile US, which is owned by Bonn, Germany-based Deutsche Telekom. After all, mobile-phone competitors AT&T and Verizon have elaborate video offerings, while T-Mobile does not.
Also, Khan noted that with the deal T-Mobile also gets access to Dish’s additional spectrum — or radio frequency that carries all wireless communications. Combined, the companies would have more wireless spectrum than either AT&T or Verizon, according to a report last month by Recon Analytics.
Finally, Khan noted that T-Mobile would also inherit the strong product innovation team that Dish has built over the last several years. And what technology company doesn’t need that?
So far, Wall Street seems to like the merger, as Dish stock (DISH) is currently trading up nearly four bucks per share, or about 5 1/2 percent. See the trend below, which is charted on a one-month timeline:
T-Mobile stock (TMUS) is also have a nice day, up $1.47 per share or 3.84 percent, at the time of this writing. Share trends are posted below, also with 30 days for comparison:
MAG is a management consulting and technology innovation firm that specializes in broadband, mobile, device and content.
Neither Dish or T-Mobile had a comment when TheWrap reached out to both companies on Thursday.