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Will Dish Wireless Actually Launch Its Own Network? Some Think Not

The merger of T-Mobile and Sprint would never have been approved by the Justice Department had Charles Ergen not promised to launch a new nationwide wireless competitor to protect competition. But now Ergen may be wavering over his commitment.

The founder of satellite TV company Dish Network had promised to spend nearly $10 billion to build a new 5G network capable of reaching 70 percent of the population by June 2023 as part of negotiations between T-Mobile, Sprint, and the federal government. But with the coronavirus pandemic shutting down the U.S. economy, the New York Post reports the company will have a difficult time finding the money to build that network.

“I think whatever rosy projections Charlie had are now very questionable,” said a source who expected to be part Dish’s lending group. “There is no financing to build a telecom network.”

Oddly, Ergen predicted just such a scenario in December when he testified to Dish’s ability to replace Sprint. In order to prove he was fit for the job, the 67-year-old media mogul showed off letters from three banks — Deutsche Bank, JPMorgan and Morgan Stanley — saying they would gladly fund his expensive network construction.

“Where the markets are today — if we don’t have another 9-11, God forbid — the banks are confident,” Ergen told the packed courtroom.

That testimony helped convince Manhattan federal judge Victor Marrero to approve T-Mobile’s $26 billion acquisition of Sprint, despite calls by a group of attorneys general, including Letitia James of New York, to block the deal, which they said would reduce competition and increase prices for consumers.

Ergen’s commitment to build a new fourth national wireless carrier was crucial for T-Mobile and Sprint to win regulatory approval of their $26 billion merger, which will reduce the number of national wireless competitors to three. That merger secretly received help from the country’s chief antitrust enforcer, Makan Delrahim. The Trump-appointed regulator, who serves as the head of the Justice Department’s antitrust division, exchanged numerous text messages between himself and top executives of Sprint, T-Mobile, and Dish to help salvage a merger deal under heavy criticism from Democrats and consumer advocates. Delrahim signaled his approval of the merger if Dish promised to buy Sprint’s prepaid wireless brand Boost and was offered access to T-Mobile’s wireless network to help launch Dish Wireless as a new competitor. But executives from Sprint and T-Mobile repeatedly quarreled over the details of the merger with Ergen, forcing Delrahim to intervene and bring the parties together to smooth things over.

Several consumer advocates and state attorneys general questioned the merger and Ergen’s commitment and capacity to serve as a new competitor. Ergen has warehoused wireless spectrum for years and has yet to meaningfully deploy it, deal critics contend. Additionally, Dish Wireless will be unlikely to achieve the scale and size of Sprint, the wireless carrier absorbed by the merger. That could mean it would be unable to deter anti-competitive behavior by the three larger companies — AT&T, Verizon, and the New T-Mobile. The most skeptical suggest Ergen has no intention of constructing a network for Dish Wireless. Instead, they contend he quietly intends to sell the wireless operation and potentially sweeten the deal by including Dish’s satellite TV business, its existing portfolio of unused wireless spectrum, or both.

If Ergen cannot meet the 2023 deadline, regulators could fine his company $2 billion and force it to relinquish the $12 billion worth of wireless spectrum Dish Network has been warehousing for years.

To succeed, Ergen will need Wall Street banks to cooperate and continue extending Dish Wireless credit. He will also need to find capable engineers ready to place 5G infrastructure on thousands of cell towers at the same time other wireless providers are building 5G networks of their own. None of this will be possible until the coronavirus crisis abates and the economy recovers. Despite this, some analysts are willing to still give Ergen the benefit of the doubt.

“Two months of severe market uncertainty doesn’t really alter my view of a company to execute on a three-year plan,” Lightshed Partners Analyst Walt Piecyk told The Post, saying it is too soon to question if Ergen will meet the deadline.

Ergen may also be able to convince regulators to approve a delay, pushing out the deadline. Assuming Ergen closes the deal to acquire Boost Mobile, which currently relies on Sprint’s 4G network to service its prepaid wireless customers, Boost will likely be rechristened Dish Wireless and serve as Ergen’s contribution to a competitive wireless industry until his own network gets off the ground.

Reuters: DoJ Ignored Bid from Charter Communications to Acquire T-Mobile/Sprint Assets

NEW YORK (Reuters) – Charter Communications submitted a proposal to the Justice Department to buy telecom assets being sold under the T-Mobile US and Sprint Corp combination, but never heard back from the agency, three sources familiar with the matter said.

U.S. officials decided to accept a deal to sell assets including Sprint’s Boost Mobile brand to satellite TV provider Dish Network to resolve antitrust concerns, ending extensive talks on a merger the Justice Department is expected to approve this week.

The Justice Department’s lack of response to Charter could raise concerns among critics of the $26.5 billion merger of wireless carriers T-Mobile and Sprint that officials did not weigh all divestiture offers before deciding on a deal with Dish.

Details of the proposal were not immediately known, but sources said this week Charter had requested that there be an auction process for the divested assets.

The Justice Department declined to comment. Charter was not immediately available for comment.

Ten state attorneys general, led by New York and California and including the District of Columbia, filed a lawsuit on June 11 to stop the merger, saying it would cost their subscribers more than $4.5 billion annually. Four more states have since joined the lawsuit.

Dish emerged as the leader to acquire the prepaid phone brand Boost Mobile, which T-Mobile and Sprint are selling in order to gain regulatory approval for their merger.

Charter began offering its own mobile service called Spectrum Mobile last year, which runs on Verizon Communications’ network. It served 310,000 mobile lines as of the first quarter.

Dish, which has been stockpiling billions of dollars worth of wireless spectrum, faces a March 2020 deadline to build a product using the spectrum in order to fulfill the requirements of its licenses. It has focused on building an Internet of Things network, with the goal of eventually having a 5G wireless network.

The Federal Communications Commission has indicated it is prepared to approve the Sprint and T-Mobile merger.

Reporting by Angela Moon and Sheila Dang in New York; additional reporting by David Shepardson and Diane Bartz in Washington; editing by Chris Sanders and Leslie Adler

Justice Dept. Ready to Approve T-Mobile/Sprint Merger

The Justice Department has helped engineer an approvable merger deal between T-Mobile and Sprint that will get antitrust regulators’ blessings as early as tomorrow, according to a report in the Wall Street Journal.

The sticking point that held up merger approval for weeks was the divestiture of certain wireless assets to Dish Network, which claims it will temporarily use Sprint and T-Mobile’s wireless networks to offer a new nationwide “fourth option” for cell phone service. Dish’s new cell phone service will come from a $1.4 billion acquisition of prepaid carrier Boost Mobile, which currently relies on reselling Sprint’s 4G network. Dish would inherit Boost’s nine million customers. Dish will also be able to lease access to T-Mobile and Sprint’s existing wireless networks for up to seven years while it builds out its own network of cell towers. The deal also includes a guarantee that Dish can pay $3.6 billion to acquire 800 MHz wireless licenses held by Sprint.

The Justice Department claims that lower frequency spectrum will allow Dish to service rural communities, assuming Dish is willing to invest in cell tower construction in high cost, low return areas.

Regulators in the Trump Administration’s Justice Department claim shaving assets from a super-sized T-Mobile will preserve the competition that will be lost when Sprint becomes a part of T-Mobile. But Dish will emerge as a miniscule player with only a fraction of the 100+ million customers that AT&T and Verizon have, and at least 80 million customers signed with T-Mobile. One of the core arguments T-Mobile and Sprint made in favor of their merger was that each was too small to afford to deploy 5G service quickly and efficiently. Dish will have even less money to build out a basic 4G wireless network.

Another merger requirement for the combined T-Mobile and Sprint will be mandatory support for eSIM, which allows consumers to change wireless carriers quickly without investing in a physical SIM card. But that requirement will not impact AT&T or Verizon Wireless, which both continue to push physical SIM cards on the much larger customer bases.

If the Justice Department does publicly approve the merger, the last hurdle the wireless companies will have to overcome is a multi-state lawsuit filed by attorneys general that argue the merger will impact low-income customers and is anti competitive. That court case is unlikely to be heard until late fall at the earliest.

CNBC’s David Faber reports that T-Mobile and Sprint have settled with the Department of Justice to go through with their merger deal. (6:14)

Disney Tells Dish Network to Pay or Else; Dish Appears Ready to Say Yes

Phillip Dampier July 22, 2019 Consumer News, Dish Network, Online Video 1 Comment

Dish Network had until 11:59pm MDT on Sunday, July 21 to cut a deal that paid The Walt Disney Company more money or satellite and streaming customers could have lost access to five Disney-owned networks: National Geographic, FX, FXX, FXM (Movies), and NatGeo Wild.

“Our contract with Dish for the FX and National Geographic networks is due to expire soon, so we have a responsibility to make our viewers aware of the potential loss of our programming,” NatGeo and FX said in a statement last week. “However, we remain fully committed to reaching a deal and are hopeful we can do so.”

The deadline came and went and so far, the networks remain on the lineup after both parties agreed to extend talks.

The cable networks were formerly owned by 21st Century Fox, but were part of a package sale worth $71.3 billion to Disney in March.

Separate negotiations are also underway with the Fox Regional Sports Networks, which also achieved a temporary extension. Both sides indicate they are optimistic they will arrive at a deal.

Negotiations with Meredith Corporation’s 17 over the air TV stations did not fare as successfully. Satellite and streaming customers lost access to those stations last week.

CNBC: Justice Dept. Gives T-Mobile/Sprint Merger One Week to Settle Issues

WASHINGTON (Reuters) – The U.S. Justice Department would sue to block the merger of T-Mobile US Inc and Sprint Corp if the parties do not settle next week, CNBC reported on Thursday, citing sources.

T-Mobile and Sprint did not immediately respond to Reuters requests for comment. The Justice Department declined to comment.

In June, a group of U.S. state attorneys general filed suit to block the merger, arguing that the deal would cost consumers more than $4.5 billion annually.

To win over the Justice Department, which is not involved in the lawsuit, T-Mobile and Sprint have agreed to a series of deal concessions, including selling the prepaid brand Boost.

The companies have been in talks for weeks to sell Boost to Dish Network Corp but are haggling over issues such as restrictions over who can buy the divested assets if they are sold in the future, with T-Mobile and Deutsche Telekom seeking to prevent them from going to a cable or technology company.

T-Mobile is about 63% owned by Deutsche Telekom and Sprint is controlled by Softbank Group Corp.

The companies told the court in late June that they were willing to refrain from closing the deal until after the state attorneys general case is completed.

The two companies have a July 29 deadline to complete the deal but are expected to extend it.

Federal Communications Commission chairman Ajit Pai has given his blessing to the merger in principle and is expected to circulate a formal order within weeks.

Reporting by David Shepardson and Diane Bartz in Washington and Akanksha Rana in Bengaluru; Editing by Sonya

CNBC’s David Faber reports the biggest stumbling block in the merger is a fear Dish might sell its wireless service to a cable company. T-Mobile wants contract language restricting that possibility. (5:13)

 

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