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Dish is putting its future 5G network at great risk by stalling T-Mobile deal

Published: Jun 16, 2020, 8:02 AM

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Dish is putting its future 5G network at great risk by stalling T-Mobile deal

Dish has made a lot of headlines in recent months, playing a crucial role in getting the protracted merger between the nation's third and fourth-largest wireless service providers across the finish line by vowing to take the latter place and then repeatedly hyping up a 5G network that's still a long way from meeting its hefty requirements.

Said conditions, mind you, were set by the Department of Justice last year as a key requirement of a three-way agreement that convinced the US government to green-light the $26 billion T-Mobile/Sprint union.

But before Dish Network can even start working towards complying with that distant June 2023 deadline, a smaller deal that seemed so easy to get done at first is in bigger and bigger danger of falling through.

Dish may not afford to play hardball after all

The wireless landscape, like so many other big businesses, has radically transformed from the moment Charlie Ergen agreed to pay $1.4 billion for Sprint's prepaid assets almost a year ago. As such, it didn't exactly come as a shock that the notoriously tough negotiator and shrewd businessman who founded Dish back in 1980 was reportedly seeking a revision of some sort of the terms of a Boost Mobile acquisition that needs to be finalized soon.

When these rumors first emerged, analysts speculated Ergen was at an advantage, looking likely to "squeeze" a better deal out of T-Mobile ahead of the acquisition's July 1 deadline. But a number of industry pundits now claim the co-founder and chairman of the US satellite TV market veteran has "no leverage", needing "this deal more than T-Mobile does", which means he can't just "walk away" at the eleventh hour.

While it remains unclear if T-Mo would get the FCC and DOJ's approvals to sell Boost Mobile to a different buyer, it seems safe to assume government officials wouldn't be pleased with Dish if that happened due to Charlie Ergen's difficult nature and hardball negotiation style.

After all, the FCC and DOJ essentially vouched for Ergen's reliability, blindly trusting his long-term wireless ambitions following years and years of valuable spectrum hoarding. Said spectrum, part of which T-Mobile recently leased to temporarily improve its network capacity, would undoubtedly be the best way to penalize Dish if the Boost transaction is further delayed or canceled altogether.

5G buildout danger ahead?

Labeled by many insiders as a mere pawn in a bigger game of wireless chess, Boost would allow Dish to dip its toes in the mobile network carrier waters before diving in the 5G sea down the line. The plan is to adopt a portfolio of over 9 million prepaid customers and try to expand that in the next seven years primarily as a T-Mobile MVNO (mobile virtual network operator).

But if the $1.4 billion acquisition falls through, Dish is obviously looking at no revenue prospects whatsoever from its "fledgling network" until its decidedly ambitious but distant 5G service is finished and ready to "serve customers on a standalone basis."

The problem is the company needs all that aforementioned spectrum it's been hoarding all this time with no intention of using for these standalone 5G rollout ambitions to ever materialize, and in order to retain that, Dish may have to keep the FCC happy by playing nice with T-Mobile.

Last but not least, Charlie Ergen has long teased the possible involvement of a high-profile partner in its large-scale 5G project, and analysts believe the "very spectacle of renegotiating a deal that was so recently signed risks scaring away potential strategic investors" like Apple, Google, or Amazon.

At the end of the day, it's crystal clear that T-Mobile and Dish need each other, which strongly suggests this (mini) saga will reach a happy ending in the near future.

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Adrian, a mobile technology enthusiast since the Nokia 3310 era, has been a dynamic presence in the tech journalism field, contributing to Android Authority, Digital Trends, and Pocketnow before joining PhoneArena in 2018. His expertise spans across various platforms, with a particular fondness for the diversity of the Android ecosystem. Despite the challenges of balancing full-time parenthood with his work, Adrian's passion for tech trends, running, and movies keeps him energized. His commitment to mid-range smartphones has led to an eclectic collection of devices, saved from personal bankruptcy by his preference for 'adequate' over 'overpriced'.