Dish Network’s goal of becoming the fourth national wireless carrier faces numerous challenges. But in its favor, analysts say, is it has no legacy technology to maintain and deep-pocketed potential partners.
T-Mobile and Sprint received approval from the Department of Justice Friday for their $26B merger on the condition that they sell Sprint’s prepaid wireless business and some 20,000 cell sites to Dish, Inside Towers reported.
That paves the way for the satellite TV provider to enter the wireless market.
Dish co-founder Charlie Ergen stepped down from his role as chief executive in 2017, to focus on building the wireless business. He’s now Chairman of Dish and EchoStar. During the company’s second-quarter earnings call Monday, Ergen said starting as an MVNO means Dish won’t have to enter markets from scratch. “We get to build our own network and provision our own customers.” Once the deal closes, Dish’s Boost customers can roam on the new T-Mobile network. “Now, we can be in business as soon as we enter the first market, instead of going one market at a time.” The deal puts Dish into a better position that it expected, Ergen explained.
Dish has said it will spend $10 billion on the second phase of its network buildout. Ergen said the company will look to partner with other companies for backhaul, towers, mobile edge computing, etc. “The plan is not to duplicate [efforts] with a completely new sandbox. For example: We have call centers today. We just need to do new training. We have a lot of infrastructure in place.”
Dish will also get 20,000 towers out of the deal, Inside Towers reported. The combined T-Mobile-Sprint has to, “give us notice of which towers will be decommissioned, so we can determine which towers will fit in our footprint at the right time,” Ergen explained.
All told, Ergen stressed the overall transaction is good for America’s 5G buildout. “There’s only one other country building a standalone 5G network and that’s China. If we want to lead in 5G, Dish is very important to that effort,” Ergen said.
New Street Research analysts wrote in a research note, given that Dish’s wireless network will be 5G from the beginning, its costs to build a network would be much lower than competitors’ because it is only building one network. Rivals have to maintain multiple networks. New Street Research pegged the cost per unit of data for Dish at 75 percent lower than Verizon’s and 55 percent lower than AT&T’s. On top of the $10 billion Dish said it will spend to build the network, it needs another $10 billion to fund operating losses, according to the analysts, Reuters reported.
Dish will have no trouble finding additional capital to build its network, according to New Street. “There are a host of deep pocketed companies” that will want to support Dish’s efforts, the analysts wrote, naming Amazon.com Inc (AMZN.O) and Google (GOOGL.O) as two possible partners.
Reuters previously reported that Amazon was interested in buying T-Mobile assets to get access to its network. Dish could imitate AT&T, which has both a satellite TV and wireless phone business. Dish could offer a similar package of TV and wireless, according to analysts.
By Leslie Stimson, Inside Towers Washington Bureau Chief
July 30, 2019