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Why Rumors of T-Mobile Buying Dish Network Are Heating Up

A couple of weeks ago, T-Mobile CEO John Legere offered a prediction about satellite TV service Dish Network. “I predict 2017 will mark the end of Dish as we know it,” he wrote in a blog post. “This time next year, they’ll no longer be a standalone entity.”

Now Wall Street thinks its might may be Legere himself who will snap up the second-largest satellite service, which also owns billions of dollars worth of unused wireless airwave licenses. Shares of Dish gained 4% this week amid speculation that the company may soon be acquired, with a focus on T-Mobile as the rumored buyer. That in turn hit shares of Sprint, down 8% for the week, which wouldn’t be able to merge with T-Mobile, which it has long sought as its desired target.

Since Donald Trump’s election, the telecom sector has been close to giddy with anticipation about what new mergers the seemingly more pro-business president’s regulators will allow. But speculation about just which companies may combine has been all over the place.

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Verizon had been seen as the most likely buyer of Dish because the mega-carrier is feeling a bit of a spectrum crunch and the satellite owner has a large portfolio of airwaves licenses it isn’t using. But lately, Verizon (VZ) CEO Lowell McAdam seemed to signal he might be interested in buying not Dish, but cable TV operator Charter Communications (CHTR). This week’s rally in Dish’s stock has merely brought it back up to around $62, the level where it was trading before Adams appeared to lose interest.

Acquiring Dish would likely cost over $40 billion, given its debt load and the need to pay a premium to shareholders. T-Mobile, majority-owned by Germany’s Deutsche Telekom, has an enterprise value of about $75 billion.

Not much can happen until an ongoing federal spectrum auction ends. Under Federal Communications Commission rules for the broadcast incentive auction, which started May 31, competing bidders aren’t allowed to talk with each other in order to prevent collision. Now in its fourth and final stage, the auction is expected to wrap up any day.

The T-Mobile-Dish chatter has also heated up without much substantive information about a deal being in the works. The companies cannot be formally talking because of the FCC auction, but a few analysts—including those at Citigroup (C), J.P. Morgan (JPM), and Goldman Sachs (GS)—wrote about deal possibilities this month, and the Wall Street Journal offered its own analysis.

A swap of assets announced this week that untangled some of the relationships between Dish and EchoStar (SATS) also fueled talk that Dish was cleaning up for a big deal.

T-Mobile (TMUS) and Dish (DISH) declined to comment on the merger rumors to Fortune.

The two companies reportedly held unsuccessful merger talks back in 2015. The negotiations came as T-Mobile rival AT&T (T) was in the process of acquiring Dish rival DirecTV for $49 billion. But Dish ran into trouble with the FCC, which concluded the company had inappropriately taken advantage of auction discounts meant for startups. Talks collapsed once the FCC cancelled $3.3 billion of discounts, and a Dish-backed auction winner returned its licenses.

The 2015 talks also followed Sprint’s (S) last failed effort to merge with T-Mobile, a push which fizzled after Obama administration regulators signaled they would seek to block the combo.