DISH says AT&T to end partnership at year-end

NEW YORK (Reuters) - DISH Network Corp, the No. 2 U.S. satellite television provider, said on Tuesday it received notice that phone operator AT&T Inc is ending their agreement at the end of the year to sell TV, phone and Internet packages.

AT&T and DISH have had a joint marketing agreement since July 2003 to sell the "triple-play" package in AT&T regions.

AT&T said it provided the required six-month notification for non-renewal of its current contract with DISH. "We continue to discuss options with DISH," it said in a statement.

DISH shares fell by 6 percent on the news in after-market trading.

In early April, AT&T said it had expanded its partnership with DISH in territory previously covered by BellSouth Corp, which AT&T acquired in late 2006, and had stopped marketing a similar package with DIRECTV Group Inc, the No. 1 U.S. satellite TV operator.

That move prompted speculation that AT&T had entirely dropped DIRECTV in favor of a DISH partnership. But AT&T has repeatedly said it was still talking to both about a long-term partnership for bundled phone, Internet and video services, and that a final decision was due by the end of the year.

AT&T appears ready to set up a bidding war between DISH and DIRECTV to offer video services with its lucrative "triple play" joint marketing contract.

Video partnerships are crucial for AT&T as it competes with cable service providers. AT&T is developing its own high-speed Internet and video service called U-Verse, but its expansion is taking years and analysts say joint services with satellite are key to retaining customers.

AT&T spokesman Michael Coe said: "This is procedural. This is routine."

A DISH spokeswoman declined to comment.

(Reporting by Yinka Adegoke, Kenneth Li and Ritsuko Ando; editing by Jeffrey Benkoe and Braden Reddall)