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AT&T May be Negotiating EchoStar Communications Buyout

7:00 am on September 29, 2007 | Category: Business, Corporate, Telecom Services, Television

Telecom giant, AT&T Inc., has reportedly offered to buy Colorado-based satellite television provider, EchoStar Communications, for roughly $25 billion, in hopes of adding a nationwide pay-TV component to its current range of telecommunications services.

TheStreet.com reported on Thursday that AT&T had made an offer of $55 per share, citing “people familiar with the companies,” but said that EchoStar was still holding out for $65 per share, or a 41% premium on its share price at the time.

Oppenheimer analyst, Thomas Eagan, meanwhile, upgraded EchoStar from “neutral” to “buy,” and the company’s stock has surged almost 8% in the last two days.

“Given the success of the cable triple play and the lack of success of AT&T’s U-Verse roll out, it seems to us a matter of when, not if, AT&T acquires EchoStar,” Eagan wrote in a note to investors.

AT&T already resells EchoStar’s Dish Network service throughout its U.S. service footprint, but would achieve a significantly higher profit margin, not to mention better brand unity, by simply acquiring the company. It would also be able to avoid the expense of further expanding its U-verse fiber-optic television network, a risky venture which might not pay for itself for many years to come.

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