Will AT&T Gun for Dish?

AT&T Inc. (NYSE: T) is so hard up for spectrum after backing away from its proposed purchase of T-Mobile US Inc. that the telco might pursue Dish Network LLC (Nasdaq: DISH), a company that just happens to have a heap of wireless capacity and seems willing to talk turkey, one analyst firm reported Tuesday morning. (See T-Mobile Gets Spectrum in AT&T Breakup and AT&T Drops Bid to Acquire T-Mobile.)

We don't blame you if you are succumbing to a case of déjà vu. In 2007, an analyst at Goldman Sachs & Co. suggested that a merger between AT&T and Dish was likely within the next 12 months, because Dish could complement U-verse and give AT&T a coveted national reach for video services. Fast-forward four years, and AT&T's quest for spectrum appears to trump any other deal-drivers. (See AT&T-EchoStar Rumor Upgraded to 'Likely' .)

Stifel, Nicolaus & Co. Inc. analyst Chris King tells Bloomberg that AT&T may be getting desperate, and its possible avenues are growing narrower.

AT&T "only has a few options," King says. Leap Wireless International Inc. (Nasdaq: LEAP) and MetroPCS Inc. (NYSE: PCS) are among them, but Dish presents "less of a challenge and clean spectrum," he says. And AT&T, smarting from its T-Mobile failure, may be a bit gun-shy about pursuing another wireless carrier.

But Dish isn't without spectrum issues. Dish owns a parcel of Ancillary Terrestrial Component (ATC) spectrum, which has so far been used for satellite services. Dish has shown interest in using it for a terrestrial Long Term Evolution (LTE) network and would need a waiver from the Federal Communications Commission (FCC) in order to do so. Obtaining that waiver might be more difficult now after the LightSquared debacle. (See Charlie Ergen's Spectrum Grab , Can LightSquared Hit Its New Deadline? and LightSquared to GPS Industry: Get Bent.)

AT&T may not be the only one with eyes for Dish. A merger between Dish and T-Mobile USA has also provided grist for the rumor mill recently. (See Dish CEO Puts T-Mobile on His Wish List.)

Still, some see AT&T as Dish's most attractive option. "Dish's other options with T-Mobile, Metro PCS or Sprint Corp. (NYSE: S) would likely involve the construction of a network, of which Dish would have to foot a portion of the bill," BTIG Research analyst Walter Piecyk tells Light Reading via email. "Those types of deals would reduce the possibility that Dish could sell to Verizon Communications Inc. (NYSE: VZ) or AT&T in the future."

But it's becoming abundantly clear that Dish is game for something as it looks to reinvent itself amid increasing pressure on its core subscription-video business. Dish President and CEO Joe Clayton told Bloomberg last week that Dish is "open to all possible options. ... We could be acquired or we could be the acquirer." (See Dish Loses 110,000 Subs in Q3 .)

This apparent negotiating in the press could be a good thing for Dish and its shareholders. A buyer might have to dig deep; Alpine Mutual Funds considers $50 per share to be reasonable, Bloomberg reports. Dish shares were up 60 cents (2%) to $29.35 in afternoon trading Tuesday.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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