John Paulson Agrees…w/Me

So yesterday, hedge fund captain John Paulson (Paulson & Co.) put out a letter to their clients about why they held onto T-Mobile U.S. stock.  The feeling is that T-Mobile is still ripe for a merger/takeover by Dish Network or Sprint.  Not to brag, but I said that 2 weeks ago.

Here’s the Paulson quote:

“While the merger closed, we continue to hold the stock as we believe that T-Mobile remains a potential takeover target for either Dish or Sprint,”

In case you didn’t read my other article, I’ll summarize.  For a carrier of T-Mobiles size to truly compete with AT&T and Verizon Wireless, it would be very difficult just by the sheer volume of customers.  If you consider that Ma Bell and Big Red account for almost 200 million wireless subscribers and the rest of the major wireless carriers amount to just half of that, combined, it’s a long way to catch up.  How does a T-Mobile or Sprint compete with 2 behemoths?  Consolidate efforts, resources and combine to create critical mass.  A T-Mo Sprint merger would easily create the 2nd largest wireless carrier in the U.S.  Why do you think AT&T is buying Cricket?  And soon other regionals will get plucked up too.  AT&T is too big to buy a larger carrier like T-Mo or Sprint, evidenced by the failed merger with T-Mo.  So it’s easier for them to pick up the small guys one by one and solidify their 2nd place position, while getting the much-needed network assets to improve their capacity.  That’s why the AT&T purchase of Cricket makes sense, albeit too pricy.

Where does Dish Network fit into all of this.  Well, they have money burning a whole in their pocket and are very eager to get into wireless.  And, to be honest, there is a place for them.  Wireless is about content now, not about minutes and texts.  Dish Network isn’t necessarily a content provider, but they are a great content distributor.  What better way to distribute your content then to your wireless subscribers.  The revenue potential and added value to the content providers is mind-boggling.  Let’s not forget that they would be increasing their ARPU (Average Revenue Per User) from all sides of the customer.  Dish needs to be in wireless before Comcast and DirecTV figure this out.   They’ll make ridiculous offers for either T-Mobile or Sprint, or both, and one will budge.

Ok, so now that Paulson agrees with me, do you?

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