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T-Mobile CEO John Legere says a potential combination of Dish Network and T-Mobile “makes some sense.” (GeekWire Photo Illustration / Monica Nickelsburg).

T-Mobile seems to be perpetually on the dating scene, looking to hook up with someone who can provide spectrum or cash — or both — to help the scrappy wireless carrier compete against the likes of AT&T and Verizon. And there’s some serious flirting going on right now with satellite TV provider Dish Network.

Dish Chairman Charlie Ergen
Dish Chairman Charlie Ergen

For at least four years, Dish Network has shown interest in partnering with T-Mobile, and last week, leaders from the two companies reignited speculation about a potential deal by praising each other’s businesses. Charlie Ergen, Dish Network’s co-founder and chairman of the board, patted T-Mobile on the back during his company’s earnings call, saying Dish thinks highly of the fourth-largest U.S wireless carrier.

A few days later, T-Mobile CEO John Legere told investors at Deutsche Telekom’s capital markets day that a deal with Dish would be worth considering.

“Dish and [T-Mobile], that makes some sense,” Legere said. “It makes some sense from a standpoint of integrating that spectrum and capability and deploying it on our network, and then looking at how you merge some of the content distribution and mobile devices and their base of customers as well. So yeah, take a look.”

There’s a reason why Dish’s name continues to resurface: The company owns a swath of airwaves that are ideal for building or enhancing a nationwide network. Last month, the satellite TV provider strengthened its position, as the surprise winner in a government auction of airwaves.

With the help of partners, Dish placed $13.3 billion worth of bids to win 702 licenses. Observers say there are three ways Dish could leverage these airwaves: It could build a wireless network; it could lease it to others who might need it; and a third option is to sell it later as an asset after it appreciates.

In an interview with GeekWire, New Street Research analyst Jonathan Chaplin said Dish has a number of valuable alternatives, but acquiring T-Mobile is actually not one. “Dish acquiring T-Mobile is possible, but there’s low odds of that happening,” he said. “As much as it makes sense for T-Mobile, it doesn’t make sense for Dish at all.”

Here’s why: Chaplin values Dish’s spectrum position at about $50 billion, and because of the large sums that Dish has spent acquiring the spectrum, the company would need to ensure a large return to justify any acquisition that it makes. “If Dish acquires T-Mobile — and that spectrum becomes a operating asset — there would be no way [for T-Mobile to generate enough cash to make it worth it],” he said.

Rather, Chaplin says the more lucrative path for Dish is to partner with T-Mobile, which could use Dish’s spectrum to create more capacity on its network. At the same time, Dish could resell that capacity on a wholesale basis to anyone looking to provide wireless services, including Google, Comcast, T-Mobile, or even AT&T and Verizon.

“That’s a much better business than Dish buying T-Mobile,” he said.

q4phonescorecardIf that partnership were to be offered to T-Mobile, Chaplin said “they should do the deal in a heartbeat.”

But if Dish doesn’t offer a partnership, there are others waiting in the wings for T-Mobile, according to Chaplin. American Movil, a venture owned by Mexican tycoon Carlos Slim, who also owns and operates the U.S. prepaid wireless carrier Tracfone, already has 25 million subscribers in the U.S., who are mostly on the AT&T network. Those could be moved over to the T-Mobile network. Comcast could also be looking to make a move into wireless, and could see T-Mobile as an option.

Finally, Chaplin also thinks that Sprint still could be a candidate to merge with T-Mobile, even after last year’s talks fell apart. If that partnership were to be offered to T-Mobile, Chaplin said "they should do the deal in a heartbeat." But if Dish doesn’t offer a partnership, there are others waiting in the wings for T-Mobile, according to Chaplin. American Movil, a venture owned by Mexican tycoon Carlos Slim, who also owns and operates the U.S. prepaid wireless carrier Tracfone, already has 25 million subscribers in the U.S., who are mostly on the AT&T network. Those could be moved over to the T-Mobile network. Comcast could also be looking to make a move into wireless, and could see T-Mobile as an option.”>in the face of regulatory opposition. Regulators could approve the deal if enough new competitors enter the market. In that way, Dish could be an indirect catalyst for T-Mobile to improve its position.

Whichever companies step forward, now is the time for those conversations to occur. For the past six months, companies have been reluctant to talk with the spectrum auctions underway. Now they’ve been completed, they will begin to jockey for position.

“The thing I would impress on you is that the deals are ultimately going to happen,”Chaplin said. “We are in a ripe deal environment..Just like in Europe, there will be a period of no activity and then one domino drops, everything falls into place around it.”

In all of these these possibilities, there’s the potential to shake things up to the benefit of wireless consumers.

Chaplin, for one, sees new competitors entering the market, which will ultimately lead to more options and better prices. “What’s great for consumers is that the industry isn’t locked up in the hands of the behemoths. The barriers to entry have been lowered by technology, and with all these new entrants, it means innovation will happen faster. Prices will come down and consumers will benefit. There’s lots of reasons for consumers to be excited.”

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