Report says Dish is "desperate" to raise cash to complete its 5G buildout

Just last month Dish Network said that it would meet its obligation with the FCC to cover 70% of the U.S. with a 5G signal by the end of June. If Dish isn't able to fulfill this obligation it will have to make a "voluntary" $2.2 billion contribution to the regulatory agency. However, Dish is expected to meet this deadline although there is concern about the next one which is two years away.

Dish was put in this position because the FCC needed to replace Sprint as one of the "big four" U.S. wireless providers if it allowed T-Mobile to buy Sprint. The agency feared that reducing the number of major U.S. carriers by 25% to three would result in higher prices for consumers. In stepped Charles Ergen, chairman of Dish who always dreamed to own a wireless firm. Dish agreed to the FCC deadlines and in return, it was allowed to buy Boost Mobile and create a new wireless giant.

Dish met the first deadline as it covered 20% of the nation with its 5G signals by last June. And after the second deadline is met at the end of this month, the company will have until 2025 to cover 75% of the nation with 5G. The problem is that this task will require Dish to blanket some rural areas with its signals and that will force it to spend billions as it looks to build out its 5G network. And that is money that Dish just does not have. To meet the 2025 deadline, it is estimated that Dish will need to use 35,000 cell towers.

A source, characterized as being "close to the situation" told The New York Post that Ergen is desperate to find assets that Dish can sell. The source said about the Dish Network chairman, "He is trying to sell everything that is non-core and to finance assets that are financeable. The problem is there are only very small things to sell. It’s a drop in the bucket." Ergen has been hoping to get the deadline extended and the report says that he has been meeting with regulators in Washington D.C. in a bid to gain some more time.

New Street Research policy analyst Blair Levin says, "We believe the most likely path forward for Dish near term is to negotiate an extension on its 2025 FCC coverage requirement after meeting its June 2023 deadline. A 1–2 year extension would enable Dish to conserve or at least delay $2 to $3 billion of capital spending that would give it more runway to grow its consumer and enterprise subscriber base."

Dish is building a standalone (SA) 5G network which uses a 5G core. This delivers faster data speeds while also helping to fulfill all of the potential that 5G offers. Most 5G networks are built over an LTE core in order to save time and money. In the U.S., only T-Mobile is currently using an SA 5G network. 

The Post reports that Dish can't seem to find a partner willing to team up with it to help finance the completion of its 5G network. Back in 2019, there was talk about Dish teaming up with Google, Apple, and Amazon to help share the costs of building its SA 5G network. Apple seems more interested in offering satellite connectivity directly to iPhone handsets. And Amazon was rumored to be considering offering low-cost wireless for its Prime subscribers. One recent rumor said that Ergen was discussing a three-way merger between Dish, AT&T, and DirecTV.

At the end of this month, the clock will start ticking down toward 2025 and Dish will need to sell off some assets, find a partner, or get an extension. Last month, Ergen said that the bond market was closed to the company so raising additional debt in that manner seems to be out.

Investors are worried. The stock, which has lost 53% of its value this year, dropped another 12% in the wake of the story in the Post to close at $6.55 a share. That is well off the 52-week high of $20.35.