Dish Talks for T-Mobile Said to Stall on Structure, Valuation

The slow-moving Dish Network Corp. talks to acquire T-Mobile US Inc. from Deutsche Telekom AG have stalled over concerns related to valuation and structure, people with knowledge of the matter said.

The lack of momentum calls into question whether any transaction will get done this year or at all, said the people, who asked not to be identified because the information is private. The two companies will soon turn their attention to a spectrum auction in 2016 in which they’d either be bidding on wireless airwaves as one company or competing.

Dish and Deutsche Telekom would want to iron out an agreement in the next two or three months before focusing on the auction, the people said, and the halt in talks has made that timeframe unlikely. T-Mobile will eventually need more spectrum to continue growing, and a deal with Dish would let it avoid spending billions at government auctions.

The timing pressure stems from a quiet period the two companies would face related to an auction early next year of U.S. airwaves surrendered by television stations intended to help feed the growing need for mobile carriers. The companies will be prohibited from speaking publicly or to each other due to the Federal Communications Commission’s anti-collusion rules.

The ball is in Dish’s court, two people familiar with the situation said. Deutsche Telekom has told Dish what kind of offer it wants and so far Dish hasn’t met that demand.

Dish and Deutsche Telekom have been discussing a deal for several years. Deutsche Telekom, based in Bonn, is concerned Dish’s stock will lose significant value if its wireless spectrum is put to use in a network, and any deal would require Dish to pay partially with stock, the people familiar said.

A spokesman for Deutsche Telekom declined to comment on the status of any potential talks, as did a spokesman for Dish.

Comcast, Altice

Deutsche Telekom doesn’t need to sell T-Mobile now because the business has performed well in recent quarters, the people said. There’s a chance other buyers, such as Comcast Corp., Altice SA and Sprint Corp., could make a bid for T-Mobile in a new U.S. presidential administration, giving Deutsche Telekom more reasons to wait on selling, the people said.

“Is there some interest? Yes,” John Legere, T-Mobile’s chief executive officer, said onBloomberg Television. “Is it one of a bunch of things that make huge sense in addition to this aggressive stand-alone plan that we have, gaining spectrum, or looking at other alternatives? Yeah.”

‘Evil Duopoly’

Legere has been lobbying for a larger share in the spectrum auction next year, casting himself as a superhero against “evil duopoly” Verizon Communications Inc. and AT&T Inc.

Dish, based in Englewood, Colorado, also has “other options that may be more attractive to our board and our shareholders,” CEO Charlie Ergen said in an interview with Bloomberg last month.

Ergen is known to start deal talks and not follow through. In addition to T-Mobile, he has discussed deals with AT&T, Sprint and DirecTV in recent years, failing to close on any of them. Dish abandoned its effort to acquire Sprint in June 2013, allowing rival SoftBank Corp. to gain control of the third-biggest U.S. wireless carrier.

by Alex ShermanAaron KirchfeldManuel Baigorri