T-Mobile shares surge 6.4% on merger talks

Shares in T-Mobile US surged as much as 6.4 per cent after a report that the fourth-largest US wireless company is in talks to merge with Dish Network.

The purchase price is unresolved, the Wall Street Journal reported, citing people familiar with the negotiations.

John Legere, T-Mobile US's chief executive, would take the top role at the combined company, and Dish's Charlie Ergen would be chairman, according to the report.

Mr Ergen has said as recently as February that he is interested in deals and intrigued by T-Mobile.

A combination of Dish and T-Mobile could advance Mr Ergen’s plan for streaming mobile video to challenge cable companies and employ a vast airwave holding to compete in wireless service against the two largest carriers, Verizon Communications and AT&T.

“Dish investors have seen this movie before,” said Paul Sweeney, an analyst with Bloomberg Intelligence. “Charlie is very disciplined and if he does not get the exact terms he wants, he will walk away.”

Highest intraday price

T-Mobile shares increased 4.3 per cent to $39.98 as of 11:20am in New York yesterday, after reaching $40.77, the highest intraday price since 2008.

Dish gained 5.9 per cent to $74.97. T-Mobile's parent, Deutsche Telekom, rose 1.4 per cent in Frankfurt trading to €15.76. In September, after scuttling a possible combination with Sprint, Mr Ergen talked to Deutsche Telekom about his interest in a deal, people with knowledge of the matter said at the time.

Deutsche Telekom and T-Mobile representatives declined to comment on the Wall Street Journal report.

Dish and T-Mobile have a combined market value of about $64 billion, based on their closing prices yesterday. Mr Ergen has said he’s looking for acquisitions that will help him put a $50 billion stockpile of airwaves to work.

– (Bloomberg)