Dish Network CEO Sees Pickup in Wireless Deal-Making -- Update
February 22 2017 - 5:10PM
Dow Jones News
By Shalini Ramachandran and Imani Moise
Dish Network Corp. Chief Executive Charlie Ergen signaled
interest in participating in potential deal-making in the wireless
industry, though he maintained that the satellite operator also has
a clear path to build a wireless network on its own.
On a conference call Wednesday to discuss fourth-quarter
earnings, Mr. Ergen said that a recent realignment of assets
between Dish and its sister company EchoStar Corp. was intended to
focus the companies on their core strengths ahead of a potential
deal-making frenzy during President Donald Trump's administration,
which he said could be "more friendly" to mergers and
acquisitions.
"There's probably going to be M&A activity out there in the
future," Mr. Ergen said, and "this probably aligns the assets in a
better way to participate in that."
Mr. Ergen's comments came as Dish swung to a profit and added
net pay-TV subscribers in the fourth quarter. Its streaming service
Sling TV powered the satellite operator's first positive period of
net customer additions in seven quarters, according to Guggenheim
Securities.
Analysts have been speculating that as Verizon Communications
Inc. has transitioned to offering unlimited data packages, the
wireless giant may look to acquire Dish to get at its hoard of
airwaves. It isn't clear whether Verizon is interested; Verizon has
been exploring a combination with cable provider Charter
Communications Inc., The Wall Street Journal has reported.
Moreover, Mr. Ergen, Dish's founder and controlling shareholder,
would have to be convinced to sell in order for a transaction to
happen. He has often come to the altar only to walk away.
Other potential dance partners for Dish include Softbank Corp.'s
Sprint and T-Mobile US Inc. Dish in 2015 held merger talks with
T-Mobile, which is majority-owned by Deutsche Telekom AG, the WSJ
has reported, though those later fell apart. All the players have
held off on talks as a government auction for airwaves is underway
that restricts participants' communications with each other.
Mr. Ergen predicts deal activity will pick up after the auction
ends. "We're not going to drive that process because we're not the
biggest company, but obviously many of the assets we hold probably
could be involved in that mix."
Because Dish's core satellite pay-TV business has been losing
subscribers, Mr. Ergen has spent billions of dollars over the past
several years buying up airwaves to enter the wireless business. He
has yet to do so.
Asked about his willingness to build a new business in his
sixties, Mr. Ergen said "anytime you're passionate about
something...you can get pretty invigorated."
Since Dish isn't hamstrung by old mobile technologies, Mr. Ergen
said, it has a path to build a next-generation 5G wireless network
that is less expensive compared with other carriers' networks,
requiring fewer cell towers to offer wide coverage. He declined to
estimate a cost for such a "greenfield" network buildout.
The clock is ticking for Dish. It faces a deadline next month to
meet a government mandate that it build out a slice of its airwaves
to cover a certain percentage of the U.S. population. Mr. Ergen
said Dish is likely to miss that deadline, which means it must meet
a requirement to build out to at least 70% of the covered
population by March 2020.
Mr. Ergen said there is an opportunity to reduce Dish's buildout
cost by working to share tower space with carriers such as T-Mobile
and AT&T, who will be building more infrastructure to handle
ballooning bandwidth needs. "We do not need to do an M&A
transaction to meet the buildout schedule," he said.
For the fourth quarter, the company beat Wall Street analysts'
expectations for subscriber growth by adding 28,000 net pay-TV
customers, compared with a loss of 12,000 in the prior-year period.
Some analysts were expecting losses as steep as 87,000 customers
and credited growth at Sling TV for boosting the numbers. New
Street Research analyst Jonathan Chaplin pegged Sling TV total
customers at 1.1 million at quarter's end, while MoffettNathanson
analyst Craig Moffett put the total closer to 1.2 million.
Overall Dish reported a profit of $342.7 million, or 70 cents a
share, compared with a loss of $125.3 million, or 27 cents a share,
a year earlier.
Revenue dropped 1.6% to $3.72 billion.
Analysts polled by Thomson Reuters had forecast earnings of 66
cents a share on $3.76 billion in revenue.
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com
and Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
February 22, 2017 16:55 ET (21:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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