DoJ pushes T-Mobile and Sprint to sign deal with Dish Network

Dish Network will emerge as the fourth wireless operator in the United States according to the merger conditions drafted by the Department of Justice in order to approve the $26 billion deal between T-Mobile and Sprint.
Deutsche Telekom will control the combined T-Mobile/Sprint. Deutsche Telekom is in talks with both Dish Network and the DOJ on the parameters of a divestiture and spectrum. A deal may be finalized next week, CNBC reported.

The DOJ is pushing Deutsche Telekom to give Dish a sweeter deal to ensure the satellite TV provider can be an effective fourth player in the wireless industry to AT&T, Verizon and T-Mobile/Sprint.

The DOJ wants Deutsche Telekom to give Dish unlimited access to its network. T-Mobile has argued that Dish should only be given access to 12.5 percent of the wireless network’s capacity.

Dish would have access to a combined T-Mobile/Sprint network for about six or seven years. After that, Dish would be forced to move its wireless airwaves onto a network that it has built for itself. Dish plans to build a 5G network in the coming years.

T-Mobile has asked that no strategic investor take more than a 5 percent stake in Dish. This would limit Dish’s ability to rely on a strong company such as Google or Amazon, for capital to build a network quickly.

The talks revolve around Dish using the Sprint/T-Mobile network to host Dish’s spectrum and the economic terms of a revenue-sharing deal.

Dish would also buy prepaid brand Boost Mobile and additional spectrum as a divestiture to clear regulatory hurdles. But the Boost/spectrum acquisitions aren’t the focus of the talks between the companies.

Germany’s Deutsche Telekom and Japan’s SoftBank will not have problems in accepting Dish as a competitor. Dish will only use their network for a set amount of time, and the cost of building a new network could keep Dish at bay for years.

They do not prefer Amazon, which has reportedly expressed interest in buying Boost, has a strong balance sheet and scale to win in the US wireless market.

Dish poses threats to a T-Mobile/Sprint because it will have an incentive to undercut prices to build up subscribers. T-Mobile CEO John Legere, who is set to lead the combined company, has promised not to raise prices for three years.

The deal needs approval from California Public Utilities Commission and 14 state attorneys general who have sued to block a deal.

Dish wants to be in wireless business because its satellite TV business has lost customers. It added just 7,000 new customers for the Sling TV business last quarter.

In 2013, Dish bid on mobile service provider Clearwire but lost out to Sprint, which topped Dish’s bid.

Later that year, Dish made a $25.5 billion offer to buy the majority of Sprint.Dish lost out — this time to SoftBank.

Dish moved on to trying a merger with T-Mobile in 2015. But talks never got close to a deal because of concerns over structure and valuation.