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.

Sprint’s prepaid mobile division

Sprint will be closing down its prepaid Virgin Mobile service in February and will shift customers to its Boost Mobile brand instead and drop its standalone Mobile Broadband service.

The wireless company has virtually ignored Virgin Mobile at least as long as Sprint has been in negotiations to merge operations with T-Mobile USA. The Virgin Mobile website has also been neglected, with no media releases for almost two years and over two years of unchanged rates. Last October, Sprint dropped its last major retail arrangement with Walmart that allowed Virgin Mobile devices and airtime to be sold in Walmart stores. Best Buy and several grocery chains ended sales of Virgin Mobile devices even earlier. As of late last year, new customers could only sign up for Virgin Mobile through its own website, a sure sign Sprint was prepared to accept customer attrition and was likely to pull support for the prepaid brand.

Sprint inherited Boost Mobile after it acquired Nextel in 2005. Boost Mobile had offered its own prepaid service over Nextel’s push-to-talk network beginning in 2001. After Sprint shuttered Nextel’s network, it operated both Virgin Mobile and Boost Mobile on Sprint’s network as competing prepaid wireless services. In the last two years, Sprint apparently decided it only needed to support a single brand, and quietly began shifting its marketing exclusively towards Boost.

This week, Sprint confirmed it was shutting down the Virgin Mobile brand in the U.S. in a prepared statement.

“We regularly examine our plans to ensure that we’re offering the best services in line with our customer needs. Beginning on the week of Feb. 2, we will be moving Virgin Mobile customer accounts to our sister brand Boost Mobile – consolidating the brands under one cohesive, efficient and effective prepaid team. In most circumstances, customers can keep their current phone and will receive a comparable or better Boost Mobile service plan with no extra cost.”

The transition will strand Virgin Mobile Broadband and Broadband2Go customers that use a standalone device for mobile broadband service, often used by RV-traveling customers or those in rural areas. Sprint has decided that Boost Mobile will not serve those customers, so mobile data service provided over standalone hotspot devices will end next month.

An FAQ on Virgin Mobile’s website provides some other insight:

Customers were notified in early January about the decision to discontinue Virgin Mobile USA service plans. At that time, we informed customers of the transfer to Boost Mobile. In most instances, your existing account will be transferred to Boost Mobile with your device, and a comparable or better Boost Mobile service plan at no extra cost to you. You will keep your phone number, and your monthly payment date will remain the same as long as you continue on time payments until the transfer to Boost Mobile is complete.

At this time, paying for your service through your PayPal account will not be supported on your new Boost Mobile account and therefore, Paypal will be removed as a registered payment vehicle 4-5 days prior to the migration date. Customers enrolled on a payment method or AutoPay with PayPal accounts will need to re-establish payment options and re-enroll in Autopay using a major credit/debit card. Boost Mobile also does not accept 45/90 Day Top Up Payment Option for service payments. Customers enrolled in 45/90 Day Top Up Payment option will need to re-establish payment option and re-enroll in a Low Balance Autopay option using a major credit/debit card prior to transition in order to avoid service interruption. If your account is impacted by either of these payment methods, we will notify you with instructions for how to make changes prior to transfer date in order to avoid service interruption. Please note the Texas LIDA credits will no longer be issued following transfer to Boost Mobile.

What additional benefits will I receive with my transfer to Boost Mobile?

• Taxes and fees will now be INCLUDED in your new Boost Mobile plan.
• 6,800 Boost Mobile locations nationwide for your convenience.
• 99% nationwide coverage with voice roaming.
• Boost Perks, a reward program exclusive to Boost Mobile customers.

The wind down of Virgin Mobile may also serve as a bit of housekeeping as Sprint prepares to merge with T-Mobile. A condition of that merger is spinning off Sprint’s prepaid services including Boost Mobile service to DISH Network to create another viable national wireless carrier to protect competition. Dropping Virgin Mobile now is likely to provide an easier transition for DISH, which would launch operations with a combination of Virgin Mobile and Boost Mobile customers.

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

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)

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.