Dish Reportedly Reaches Deal in T-Mobile-Sprint Merger

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Dish Network has reportedly agreed to pay $5 billion for wireless assets in a deal with T-Mobile and Sprint, setting the stage for the Justice Department to approve T-Mobile’s $26.5 billion acquisition of Sprint, reports Bloomberg. Sources say the DOJ could announce it approves the deal as soon as today.

Under the agreement reached after weeks of deliberations, Dish would pay about $1.5 billion for prepaid mobile businesses (likely Boost Mobile) and roughly $3.5 billion for spectrum, sources familiar with the talks told Bloomberg

Dish can’t sell the assets or hand over control of the agreement to a third party for three years. DISH will sign a seven-year wholesale agreement that will allow it to use T-Mobile’s network and market under the Dish brand. The agreement also reportedly includes a three-year service agreement for T-Mobile to provide “operational support” to Dish. Representatives for Dish, T-Mobile, Sprint and the Justice Department declined to comment.

FCC Chairman Ajit Pai recommended in May that his agency clear the deal, but the Justice Department’s antitrust chief, Makan Delrahim, pushed for an agreement that would compensate for the fact that T-Mobile’s merger with Sprint would reduce the number of large carriers from four to three. Dish’s role would satisfy the government’s stipulation that there be four national wireless carriers remaining. 

Even if T-Mobile and Sprint secure the Justice Department’s approval, they face resistance from a group of state attorneys general who say the deal should be blocked because it will hinder competition and raise prices.

Wells Fargo Securities Senior Analyst Jennifer Fritzsche said in an investor report on Wednesday that if the Bloomberg report is true, the concessions “significantly weaken the State AG case.”

Noting that T-Mobile plans to report earnings today, Fritzsche states in the report: “We are at the 1 yard line! If true, we believe this likely will offer enough evidence to the DoJ of a new 4th carrier.”

Questions remain however, such as what spectrum band would need to be divested and is there a limit to the capacity that Dish can use on T-Mobile’s network in the wholesale partnership. Also unclear, is if any part of the divestiture requires a reworking of the original price terms between T-Mobile and Sprint. Comments? Email Us.

July 25, 2019

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