AT&T (NYSE:T) is in a scramble to acquire spectrum for its 4G LTE services, and may consider a bid for Dish Network Corp. (NASDAQ:DISH) — the second largest satellite television provider. Dish is holding spectrum that it acquired from bankrupt DBSD North America Inc. and TerreStar Networks Inc. If AT&T is successful, the additional spectrum would give the telecom company two to four years of breathing room in terms of capacity.
Lately, AT&T has been falling behind with strategy. The company withdrew its bid for T-Mobile after regulatory objections and was forced to pay a $3 billion break-up fee in addition to setting aside 4G spectrum for T-Mobile. Worse, it’s pre-occupation with the deal allowed Verizon (NYSE:VZ) to make outflanking maneuvers by acquiring spectrum from Comcast (NASDAQ:CMCSA), Time Warner (NYSE:TWX) and Cox Communications. As a result Verizon is now ahead of AT&T in the 4G race.
“Verizon outfoxed them during the T-Mobile process,” Mike Brell, a San Antonio-based money manager with Frost Investment Advisors LLC. “The balance of power has shifted to Verizon in the past few months. AT&T has to look at all the possibilities. They are at a competitive disadvantage now.”
Dish Network President and Chief Executive Officer, Joe Clayton, says the company is open to future acquisitions. If the deal takes place at $50 a share, a price cited as reasonable by Alpine Mutual Funds, AT&T would have to pay a 77 percent premium for Dish. This would be the highest in an acquisition greater in size than $5 billion by a telecommunications company since 2000, according to data compiled by Bloomberg.