Dish Network (DISH) Stock Gains, in Talks With Banks to Fund T-Mobile Bid

NEW YORK (TheStreet) -- Dish Network (DISH) shares are up 1.59% to $73.95 in pre-market trading on Friday following reports that the pay television company is in talks with banks concerning funding for a bid for wireless carrier T-Mobile (TMUS), according to the Wall Street Journal.

The bid would be partially paid for with $15 billion in cash, with the company considering borrowing between $10 billion and $15 billion, with the remainder of the offer to be paid for in stock.

Terms of a potential bid for the company have not been released but T-Mobile has a market cap of $31 billion while Dish Network is valued at about $35 billion.

The deal would also give T-Mobile's parent company Deutsche Telekom (DTEGY) a large minority stake in the combined company, according to Journal sources.

A merger involving about $14 billion in cash and the rest in stock would leave Deutsche Telekom with a 27% stake in the new company according to an analysis done for the Journal by Moody's Investors Service.

Dish's bid for T-Mobile is not guaranteed and the two companies are still currently in negotiations.

TheStreet Ratings team rates DISH NETWORK CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DISH NETWORK CORP (DISH) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 99.8% when compared to the same quarter one year prior, rising from $175.93 million to $351.49 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 3.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $891.60 million or 39.16% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.24%.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 25.95% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • DISH NETWORK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DISH NETWORK CORP increased its bottom line by earning $2.03 versus $1.86 in the prior year. For the next year, the market is expecting a contraction of 3.9% in earnings ($1.95 versus $2.03).
  • You can view the full analysis from the report here: DISH Ratings Report

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