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AT&T-EchoStar Merger Rumors Heat Up

AT&T stock dropped 47 cents (1.12%) to $41.55 per share Wednesday, after a report in The Wall Street Journal revived speculation that AT&T may be looking to acquire EchoStar Communications.

The Journal noted in its “Heard On The Street” column that buying EchoStar -- a deal that could cost the telecom giant $30 billion to $40 billion -- could be difficult for AT&T following its acquisition last year of BellSouth.

“It would create uncertainty,” John Krause, a stock-research analyst at Thrivent Investment Management in Minneapolis, told the newspaper.

Some on Wall Street have speculated for months that AT&T may be looking to acquire EchoStar, the second largest U.S. satellite TV company. Citigroup media analyst Jason Bazinet helped fuel more talk last week, after he predicted AT&T may acquire EchoStar within the next 12 months.

Acquiring EchoStar could help AT&T compete with cable operators. The telco has faced delays in rolling out its U-verse TV video service, which runs on an IPTV platform.

Bazinet suggested in his report that EchoStar would complement AT&T’s IPTV rollout, not replace it.

“Owning DBS can complement AT&T's fiber deployment by broadening the footprint, enhancing high-def video capabilities, and improving on demand services,” Bazinet wrote.