Sample Report Paper on T-Mobile and Dish Merger

Dish Network, the satellite-TV company, is engaged in high-level talks, which will see it acquire T-Mobile US, the wireless phone company. This has been described as one of the biggest deals in the U.S. telecommunication sector in recent years. Recently, there has been a trend of multi-billion dollar deals among players in the U.S. telecommunication industry. For instance, Verizon has taken control over its wireless business from Vodafone. Recently, Softbank, a Japanese telecom and technology giant purchased Sprint,  AT&T is currently negotiating the purchase of b DirecTV, the satellite firm, and Charter, a cable firm has lately sent a proposal to buy Time Warner Cable, which was almost being  taken over by Comcast were it not for the intervention by the federal regulators (Bajaj, 2015).

T-Mobile Acquisition History

The consolidation of T-Mobile has hit the news for several years. T-Mobile operated as a branch of Deutsche Telkom up to 2013 when the company undertook   merged with MetroPCS. To date Deutsche Telkom still owns 66% of the company, though it has been considering offloading its investment since 2011. In 2011, the company tried to sell itself to AT&T for $39 billion but this move was blocked by the Department of Justice citing antitrust issues. In 2014, it attempted to sell the T-Mobile to Sprint at $40 per share and to Iliad of France at $35 per share. The proposed acquisition by Sprint collapsed as there were fears that it would be rejected on anti-trust grounds while the Iliad transaction fell short (Acacia Capital Management (ACM), 2015).

 

Competitive Analysis and Opportunities

The U.S. wireless market is very competitive and is dominated by AT&T and Verizon. These two firms have a significant market share. They have strong nationally distributed networks, and huge asset bases. Sprint and T-Mobile are the underdogs in this industry. T-Mobile has fewer spectrums and has lower capital investments in its network infrastructure. The company has been aggressive in seeking market share and in 2014; it added 4 million post-paid clients. The company has also been actively pricing its plans with little need for customer contacts, which has been a good model for adding customers but has also been attributed to declining revenue per user short (ACM, 2015).

Dish Network commands a significant share of the wireless spectrum. The company has been strengthening its positioning in the wireless spectrum via company acquisitions and the AWS3 auction when the company paid $13.3 billion for over 700 licenses and 25 MHz of spectrum. A merger of the two firms will serve to improve the spectrum capacity of T-Mobile and enable Dish Network acquire a new subscriber base.

In addition, the combined company will capitalize on a strengthened balance sheet and this will reinforce the combined company’s market competitiveness. This will also help in strengthening the company’s growth strategy. The merger will enable the two companies to rapidly add scale and therefore achieve greater economies and market reach, gain access to new markets and networks, capture new product technologies and innovations, and wipe out competition and emerging competitive threats (Hitt, Harrison, & Ireland, 2001). Considering that the CEO of Dish retired recently, John Legere will be poised to manage the combined firm.

 

Conclusion
  • Investors have an interesting trading opportunity that could arise from the merger of Dish and T- Mobile.
  • A merger between these two companies offers numerous synergies and will significantly enhance the market positioning of T-Mobile in the wireless industry.
  • The common stock of T-Mobile is fairly valued at present, and therefore no risk-rewarding opportunity will arise if the company speculates on a merger that is not guaranteed.

 

References
Acacia Capital Management (2015). T-Mobile Preferred Equity – best risk adjusted method to speculate on a potential dish merger. Retrieved at
Bajaj, V. (2015). Dish and T-Mobile: Last if the Telecoms Mega-Deals? The New York Times June 5, 2015.
Hitt, M. A., Harrison, J. S., & Ireland, R. D. (2001). Mergers and acquisitions: A guide to creating value for stakeholders. Oxford: Oxford University Press.