Ergen to tell judge that Dish will be ready to replace Sprint on day one
We've seen T-Mobile CEO John Legere testify in court that without T-Mobile, Sprint will be sold for pieces in two years, a sentiment shared under oath by a Sprint executive. Former Sprint CEO Marcelo Claure said under oath that Sprint can survive without the merger, but it will have to raise its prices and borrow more money. And now, Dish Network Chairman Charles Ergen is scheduled to take the stand in defense of the $26.5 billion T-Mobile-Sprint merger, which has already been cleared by the FCC and DOJ. But for the deal to close, the defendants must triumph in a non-jury bench trial being held in a Manhattan courtroom.
According to Fox Business News, Ergen will testify in favor of the merger and argue that the plaintiffs, made up of 13 state attorneys general and the AG of Washington D.C., should not be allowed to block it. Once the merger is closed, Dish will spend $5 billion to purchase all of Sprint's prepaid businesses including Boost and Virgin Mobile. This includes 9.3 million Boost customers and 7,500 retail locations. Dish will also receive 14MHz of Sprint's low-band 800MHz spectrum and will enter into a seven-year MVNO agreement with T-Mobile. This will allow Dish to start selling wireless service under its own name while building out a standalone 5G network. It has agreed to cover 70% of the nation with 5G by 2023 or else pay a $2.2 billion fine.Ergen is already very much involved in the T-Mobile-Sprint merger and we will get to that in a moment.
Dish Network's Ergen has long wanted to control a wireless operator
T-Mobile received a sweet consolation package from AT&T consisting of $3 billion, a seven-year 3G roaming deal and 128 AWS markets. And the next year the company named John Legere its CEO. While Sprint does have a deep-pocketed parent in SoftBank, there is only one John Legere.Someone familiar with how Ergen prepped for his testimony told Fox that the executive will say under oath that Dish will be ready to step in to replace Sprint as the nation's fourth-largest carrier "on day one," which is expected to be early in 2020. The plaintiffs argue that Dish and Ergen can't be counted on to replace Sprint once the merger closes. The attorneys general main complaint is that by eliminating Sprint and reducing the number of major wireless providers by 25%, prices will rise. The plaintiffs have been trying to compare the current sad state of Sprint with the condition that T-Mobile was in circa 2011. They believe that if T-Mobile could turnaround, Sprint can do it too. However, that argument fails to point out a couple of things. One, as part of a merger with AT&T that was blocked by the Justice Department,
Ergen has long desired to enter the wireless market. Dish was one of the big winners of the 2017 FCC auction of low-band 600MHz spectrum. T-Mobile won 31MHz of the airwaves by bidding $7.99 billion with Comcast next. But even before then, back in 2013 Ergen got Dish involved in a heated battle over Sprint. At one point, the satellite television provider offered $25.5 billion for the carrier but lost out to SoftBank. The latter owns 80% of the company.
The trial is being presided over by Victor Marrero, Senior U.S. District Judge of the Southern District of New York. The judge holds the fate of the merger in his hands. T-Mobile is looking to buy Sprint in order to obtain its 2.5GHz mid-band spectrum. Combined with the carrier's 600MHz airwaves and some ultra-high mmWave spectrum, T-Mobile will be able to improve on the nationwide 5G network it launched earlier this month. With Sprint's mid-band spectrum, T-Mobile will be able to cover rural Americans with faster 5G signals. Legere testified last week that with Sprint's spectrum, T-Mobile will "triple the total 5G capacity of standalone T-Mobile and Sprint combined.," He added that if the deal doesn't get done, T-Mobile will "exhaust capacity in the next two to four years" in some markets.