Dish/Sprint/T-Mobile: fourth in July
The Feds are insisting on a market with 4 players
T-Mobile and Sprint will begrudgingly spawn a peer. What they want to avoid is creating a rival. The third and fourth-largest mobile operators are trying to clinch a merger that so far has been held up by the US Department of Justice. The DoJ has consistently held that it does not want the US wireless phone industry to become a trio.
The deal risked being blocked but a settlement is in the works. T-Mobile will sell its Boost Mobile unit to a new market participant who will use it along with the T-Mobile/Sprint wireless network to ensure there are four US wireless providers.
Amazon had been floated as a possible Boost acquirer. However, news reports peg Dish Networks, the satellite TV provider put together by Charlie Ergen as the likely buyer in a deal that might be days away. Dish has been an odd package of a declining legacy entertainment business combined with a huge portfolio of wireless spectrum. That spectrum may finally be put to use with Dish’s shares up 57 per cent on the year. Investors seem to like its chances of diversifying away from the cord-cutting phenomenon.
At the end of 2018, Dish had roughly 10m subscribers for its satellite TV service. Four years earlier that figure was 14m as Americans have steadily warmed to digital consumption. Dish had started its own streaming service, Sling TV, but it has just 2m subscribers, and more importantly, its pricing is so cheap that profits are scant. Despite this year’s rally, Dish shares are off by roughly half from four years ago.
Dish has spent $21bn accumulating various spectrum bands. Guessing if and how Mr Ergen was going to deploy these has been a longstanding parlour game on Wall Street. The merging companies need the sign-off from the DoJ but are also keen that Dish does not quickly build a competitor that could challenge them. The awkwardness is that the goal is exactly what the DoJ desires. While cable and broadband companies now offer limited mobile phone services, Dish may be the first full-fledged start-up in years.