Dish’s Ergen Says Sprint’s Dropped T-Mobile Bid Adds Options

Dish Network Corp. Chairman Charlie Ergen said Sprint Corp.’s decision to drop its bid for T-Mobile US Inc. has opened up more options for his satellite-TV carrier as it looks for ways to expand into the wireless business.

“The Sprint announcement probably increased some optionality that we had,” Ergen told analysts today on a conference call. “A lot has happened in the last 24 hours -- we haven’t had the chance to sit down, and we remain interested in working to enhance our overall business, and that could include looking at a number of companies out there.”

While he said Dish remains interested in T-Mobile, Ergen also lauded Sprint, which he said has a better network and has potential to expand. The odds are low of a deal with anyone before the government’s spectrum auction in November, he said.

Ergen is seeking a wireless network to help expand his TV distribution business beyond satellite transmissions as more video is delivered over the Internet. After being outbid last year by SoftBank Corp. for control of Sprint, Ergen said earlier this year he would consider a deal for T-Mobile if Sprint failed to acquire it.

Sprint pulled out of a plan to merge with T-Mobile after concluding that regulators would block a deal, people familiar with the matter said yesterday.

Dish, based in Englewood, Colorado, climbed 1.7 percent to $63.21 at the close in New York.

Auction Reset

Ergen said he has several options to consider after Sprint’s decision. The spectrum auction will also provide a “reset” for the industry by reflecting the value of airwaves held by companies such as Dish, he said.

Dish aims to acquire more capacity in the auction, in which companies bid on licenses to use public airwaves to provide wireless services. As consumers demand more video on mobile devices, the radio-frequency permits become a more important asset to hold, Ergen said.

Distributing video online could help Ergen return Dish to growth by appealing to younger consumers, whose unwillingness to pay for TV led to a decline last year in the U.S. TV industry’s subscriber base for the first time.

Dish lost 44,000 pay-TV customers in the second quarter while adding 36,000 new broadband subscribers. Higher fees helped boost revenue 5.8 percent from a year earlier to $3.69 billion, matching analysts’ estimates.

‘Right Guy’

Second-quarter net income was $213.3 million, compared with a loss of $11.1 million a year earlier. Earnings of 46 cents a share missed the average analyst estimate of 51 cents.

Dish remains on track to offer a video service over the Internet by the end of the year, including networks from Walt Disney Co., Ergen said.

While Ergen said T-Mobile “is something we have an interest in,” he said Sprint made the right choice by hiring Marcelo Claure, who founded mobile-phone distributor Brightstar Corp., to replaced Dan Hesse as chief executive officer. Ergen also praised T-Mobile CEO John Legere, who has helped the smallest of the four U.S. national carriers outgrow its rivals.

“You have to have a lot of respect for what T-Mobile has done and what John Legere has done,” Ergen said. “Sprint is capable of much, much more. They have a better spectrum position, more spectrum. Hesse did a good job in basically saving that company and selling that company. Now they have the right guy for a war.”

If he opts to pursue a bid for T-Mobile, Ergen has a potential competitor -- or partner -- in Iliad SA, the French mobile-phone carrier that has already made a $15 billion bid for control of the U.S. wireless carrier. While T-Mobile is set to reject that proposal, Iliad is seeking partners to help finance its bid and let it make an offer for a larger stake, people familiar with the matter said this week.

“There’s a number of people that are potentially good partners,” Ergen said. “There’s a lot of interesting ways that we can get in the marketplace. It may not be evident even to us until we see how it all shakes out.”

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