Dish may not be able to fulfil its 5G rollout promises due to the coronavirus pandemic

Dish may not be able to fulfil its 5G rollout promises due to the coronavirus pandemic
It's no big secret that T-Mobile and Sprint had to jump through a bunch of regulatory hoops, clear numerous legal hurdles, and pull quite a few political strings over a period of almost two years to finally close their high-profile and highly divisive merger a couple of weeks ago.

The most important piece of the merger approval puzzle was probably a third company by the name of Dish. A major player on the US satellite TV scene, the Charlie Ergen-founded outfit committed to replacing Sprint as the nation's fourth-largest wireless service provider in a move aimed at preserving market competition.

Dish finds itself in a delicate financial situation


While Ergen himself solemnly promised in a court of law to provide stiff competition for "New T-Mobile" in the very near future, many industry analysts were quick to voice their skepticism, which a group of state AGs suing to block the merger essentially turned into their main legal argument supporting their stance. Ultimately, District Judge Victor Marrero sided with T-Mobile, Sprint, and Dish, which pretty much cleared the way for the transaction's completion.

But whether Dish was initially serious or not about following through on pledges made to the DOJ, a largely unforeseen event is now making it unlikely that the company will be able to stick to its original 5G rollout schedule. Obviously, we're talking about the ongoing coronavirus pandemic, which has created an unstable financial climate essentially worldwide.

 

This is undoubtedly affecting Dish too, a company that's already announced a first round of layoffs after being forced to "take a closer look at every aspect" of its business, as well as its "work volumes, areas of focus and investments, and the performance of team members." Of course, these undetailed layoffs from the "In Home Services" division could actually suggest Dish remains very much focused on its wireless goals, trimming the fat elsewhere, but perhaps unsurprisingly, market pundits are now even more skeptical than before.

Inside sources tell the New York Post "whatever rosy projections Charlie had are now very questionable", as building a telecom network requires substantial financing, which seems virtually impossible to obtain from banks that originally signaled their support for the company's purportedly ambitious plans.

5G launch delays seem unavoidable all of a sudden


At the very least, it's looking pretty much guaranteed that the "timeline" for this nationwide wireless network buildout is "going to get pushed back", according to a former FCC special counsel quoted by the same aforementioned publication. But any delay could cost Dish dearly under the terms of its 2019 agreement with the Department of Justice.

We're talking a potential $2 billion in fines if the company fails to provide a 5G signal for at least 70 percent of the US population by June 2023. On top of that, Charlie Ergen is liable to lose access to a bunch of very valuable spectrum hoarded over the years with no apparent intention of ever using that technology. Some of that spectrum is currently used by T-Mobile to temporarily boost download speeds, highlighting its amazing potential.


That hoarding strategy was precisely the reason why analysts warned of Ergen's unreliability in the first place, but naturally, the situation is entirely different now. Unfortunately, we may never know if Dish's Chairman intended to meet the DOJ's deadline and fulfil his initial promises. Furthermore, the company might be able to get an extension and avoid financial penalties on a provision of its deal with the Department of Justice naming "an act of God" as an acceptable excuse for a 5G rollout delay. 

It remains to be seen if said clause will be invoked, and in fact, if there's any truth to rumors of delays and uncertainties to begin with.

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