Dish Soars on T-Mobile Buyout Talk, Sprint Tanks Sitting on Sidelines -- Telecom Winners & Losers

NEW YORK (TheStreet) -- Dish Networks (DISH) spiked after reports the satellite TV provider is in talks to acquire T-Mobile U.S. (TMUS), a move that could push the company into the wireless business in a meaningful way. Wireless carrier Sprint (S) tanked as investors feared it may be left on the sidelines of the telecom and media merger mania. Ericsson (ERIC) jumped after an analyst upgrade.

Dish Networks soared 4.9% to close at $74.25.

The satellite TV and entertainment company is reportedly in talks to buy T-Mobile U.S, which has undergone a round of unsuccessful buyout talks with other suitors. Sprint, for example, dropped its plans to acquire T-Mobile after regulators weighed in with concerns about a shrinking market of major U.S. carriers. Iliad SA also halted its T-Mobile acquisition plans in October, according to a Reuters report.

The Dish and T-Mobile buyout talks, which Bloomberg noted in a report, are slow moving and had resumed in September but largely have failed to move much further since then.

The CEO of Dish Network has been negotiating with Deutsche Telekom AG, T-Mobile's controlling shareholder. Dish's interest in the telecom carrier apparently is centered on giving Dish an entry point into mobile video that could potentially compete with pay-TV, according to Bloomberg.

Also, a Dish and T-Mobile deal would transform T-Mobile into the No. 2 carrier in terms of the treasure trove of spectrum licenses, or airwaves, that T-Mobile would gain as a result of a merger, according to Reuters. That would put it past behemoths AT&T (T) and Verizon Communications (VZ) and behind Sprint, according to Reuters.


Sprint tanked 6.3% to finish the day at $4.45.

Investors may have been spooked that Sprint will be left on the sidelines of the telecom and media merger mania, according to a 24/7 Wall Street report. For example, Verizon recently announced plans to acquire AOL (AOL), AT&T is close to hooking up with DirecTV (DTV) and now Dish is looking at snapping up T-Mobile.

Sprint's market cap is roughly $18 billion and it is carrying $32.5 billion in long-term debt, as well as another $18 billion in deferred long-term charges and other liabilities, according to 24/7 Wall Street. The report noted that if a prospective buyer does not make the acquisition via a stock deal, it would likely result in acquiring more debt.

That may make such an acquisition of Sprint potentially less attractive.


Ericsson jumped 2.4% to close at $11.61.

The communications technology and services company got a lift after J.P. Morgan upgraded the company to neutral from overweight, according to a report in Briefing.com

That upgrade followed Ericsson's forecast Wednesday that it expected 6.1 billion smartphone subscriptions by late 2020 -- more than double the 2.6 billion in 2014, according to a Reuters report.

As a a result, mobile data traffic is expected to soar ninefold, according to Reuters. That stands to benefit Ericsson, the largest telecom network equipment maker in the world.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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