Charlie Ergen, Dish Network Corp’s chairman had made a bid to acquire MetroPCS in the month of August for USD 4 billion and the company is taking serious measures to enter into the wireless business.
Mr. Ergen is buying Metro PCS for US$11 per share and he will be paying 30 percent in cash and 70 percent in stock. Mr. Ergen courted MetroPCS right from last March. Talks fell apart later in the month of August and MetroPCS announced its merger with Deutsche Telekom AG unit T-Mobile in early October. This particular deal combines the 4th- and 5th-largest wireless carriers in United States.
Dish, the satellite TV provider, gained a foothold in the wireless industry by building up billions of dollars since 2008. The company showed its seriousness in acquiring the wireless business to the Federal Communications Commission.
Dish said that it wants to branch out the business in the U.S. pay-TV market. Dish was prepared to offer the service to the cellular customers as well.
The company is awaiting the FCC decision in changing the current rules and allowing the satellite operators to use the spectrum for cellular based networks. FCC favors Dish’s request with very few limitations.
Mr. Ergen said that it will be a big change for them in the current wireless industry with increasing risk. In the meantime, Sprint Nextel Corp has showed its interest in acquiring MetroPCS until they complete the deal with T-Mobile, and Sprint is also working on the deal to sell its stake of 70 percent to Softbank Corp. for US$20 billion.
An executive from “Company G” contacted Metro PCS earlier in this October before T-Mobile announced its deal publicly. People familiar with the latest developments said that the company G was Sprint.
When the deal was informed to T-mobile, the executives expressed their hope that no transactions would occur. However, if it occurs, he hoped that breakup fee payable by MetroPCS for pursuing an alternative transaction will be reasonable. Under the agreement, MetroPCS will pay breakup fee of around US$ 150 million.
There have been many discussions regarding the wireless industry in the past few months, showing the company’s efforts to lineup the spectrum and grow larger in consolidating the business from previous year’s collapse.
Deutsche Telekom has contacted MetroPCS regarding a fresh deal, after the deal collapsed with AT&T, according to the filings.