T-Mobile/Sprint/Dish deal is done (almost)

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Analyst Craig Moffett (of MoffettNathanson) summed up the position on the huge merger between T-Mobile and Sprint, and where Dish Network fits into the picture, saying: “The deal is Done! (Just kidding…No it isn’t)”.Charlie Ergen, who heads up Dish (and Echostar) is very supportive, saying: “These developments are the fulfilment of more than two decades’ worth of work and more than $21 billion in spectrum investments intended to transform Dish into a connectivity company. Taken together, these opportunities will set the stage for our entry as the nation’s fourth facilities-based wireless competitor and accelerate our work to launch the country’s first standalone 5G broadband network.”

Ergen says that he will conform to the requirements to build out the network to serve 70 per cent of the US population by 2023.

Moffett admits that we now know a little more, but it is far from clear not least on the massive question of access to cellular re-transmission towers. “There was some initial confusion about this issue when we and others saw mention of ‘use of 20,000 towers’ but that appears to refer only to Dish’s right to assume tower leases that Sprint and T-Mobile don’t want.” (see below)

He rightly argues that deal looks like a MVNO agreement (Mobile Virtual Network Operator) as far as Dish is concerned. “We’ve written repeatedly that if the deal ends up being nothing more than a glorified MVNO agreement, then the State Attorneys General will never agree to it. And sure enough, the attorneys general for the thirteen states and the District of Columbia who had already filed to block the transaction have affirmed that they will continue [to object]. The original court date of October 7th already appears to be off the table. We’re likely looking at a court case that starts in December. That means we’re very likely at least six months away from knowing whether this deal will or won’t happen. Oh, and the California Public Utilities Commission (CPUC) decision is still pending as well.  Heaven help us all.”

Moffett says the deal terms as described also confirm that Charlie Ergen’s Dish Network “really is going to have to build a network… sort of. They were granted the buildout deadline extension they wanted and needed. Their new deadline is supposedly June 14 th2023, by which time they will need to serve 70 per cent of the US population, with separate requirements in each of their individual licence areas (they have numerous different spectrum licenses covering different bands and different geographies). In reality, however (at least for the AWS-4, 700 MHz, and H Block spectrum) the deadline is 50 per cent by that date, and 70 per cent thereafter, as they will be automatically granted a two-year extension if they hit the 50 per cent milestone by June 2023.

Charlie Ergen, as frequently mentioned in the days leading up to the decision, is prohibited from selling Boost Mobile and this new operation for 6 years. The DoJ decision says: “DISH will also consent, for six years, not to lease, directly or indirectly, to any of the three largest wireless providers, or any combination thereof, traffic accounting for more than 35 per cent of the network capacity on its 5G network without prior FCC approval.”

The deal’s DoJ settlement terms states: “T-Mobile and Sprint must divest Sprint’s prepaid business, including Boost Mobile, Virgin Mobile and Sprint prepaid, to Dish Network Corp., a Colorado-based satellite television provider. The proposed settlement also provides for the divestiture of certain spectrum assets to Dish. Additionally, T-Mobile and Sprint must make available to Dish at least 20,000 cell sites and hundreds of retail locations. T-Mobile must also provide Dish with robust access to the T-Mobile network for a period of seven years while Dish builds out its own 5G network.”

Meanwhile, the deal is dependent on the various remaining state Attorneys General removing their legal objections.


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