Dish Network chairman and CEO Charlie Ergen predicted there will be more merger and acquisition activity in the communications space in the next two years, driven mainly by a favorable regulatory climate.
“I think it’s probably a better regulatory environment today than it has been over the last decade,” Ergen said on a conference call with analysts to discuss Q2 results. “It’s probably a two-year window where there is going to be increased M&A. We’ve already seen it in content industry, I think you’ll see same in the communications industry.”
Ergen wouldn’t comment on where exactly Dish would fit in – he said the satellite service provider is not the biggest player, so it will probably wont be “driving that train.” However, it will at least be a part of the conversation.
Ergen declined to comment about the speculation surrounding one of its former merger targets, wireless carrier Sprint. Dish attempted to buy Sprint in 2013 but was bettered by an offer from Japanese wireless giant Softbank.
Now Softbank is reportedly investigating deals with potential targets ranging from No. 3 wireless carrier T-Mobile and No. 2 cable operator Charter Communications. Charter has said publicly that it is not interested in a deal, but Sprint is reportedly undeterred and has lined up bankers for a possible offer.
Ergen said he does expect cable operators to get more involved in the wireless space, adding that he thought initial moves by Comcast and Charter to activate mobile virtual network operator (MVNO) agreements with Verizon as “smart.” But over time he expects the economics of owning a wireless network will force at least some cable operators to the deal table.
“They are probably going to enter the bsiness sometime in a bigger way,” Ergen said of cable companies and wireless. He added that other entrants are likely to join in the hunt, especially large tech companies that rely on connectivity for their business but don’t control that connectivity.
“At some point in time they are going to start taking out insurance policies to make sure they have a little more control of that,” Ergen said. “You’re going to have some dynamics that change in this industry.”
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Ergen also sidestepped speculation that Dish and Amazon had talked about possible wireless pairings, but did say Amazon is one of the larger companies that need to think about connectivity.
“The cloud business doesn’t work unless its connected,” Ergen said, as does plans for drone-based deliveries of products. “They also have a big video business now, and that video business a lot of times is watched on mobile devices. You need connectivity for that. I don’t have inside information, but they have to look at connectivity as part of the future.”
Ergen said they could achieve that by either buying an incumbent carrier, or buying or leasing wireless spectrum.
