Verizon takes equity stake in MobileX
While EchoStar Chairman and CEO Charles Ergen's SPAC CONX acquired MobileX, Verizon took a small piece of the MVNO.
MobileX is acquired by Charles Ergen's SPAC. | Image by MobileX
Remember when current EchoStar chairman Charles Ergen, who had always wanted to run a wireless firm, had yet to have that wish come true? Back in 2013, Ergen found himself in the middle of a big-time takeover battle as he and DISH battled Japan's SoftBank and its iconic Chairman and CEO Masayoshi Son for Sprint.
On a personal note, I enjoyed covering the back and forth and at one point Ergen, as chairman and CEO of DISH, made a blockbuster bid. He offered $25.5 billion for Sprint, topping SoftBank's bid. However, the SoftBank bid was fully funded unlike the one from DISH, and it was SoftBank that ended up with the prize.
DISH was a surprisingly strong bidder at the FCC's low-band 600MHz auction in 2017+
Missing out on Sprint didn't stop Ergen from wishing that the wireless fairy would drop a carrier under his pillow. When the dust settled on the FCC's 2017 auction of 600MHz low-band airwaves, T-Mobile was a huge winner having spent $7.9 billion to win 45% of the spectrum up for grabs. But surprisingly, DISH was the second largest winning bidder spending $6.21 billion for 486 low-band spectrum licenses nationwide even though it had no wireless service to sell at the time.
Who will really be running MobileX?
DISH finally had a wireless business when it acquired Boost Mobile as part of a plan to make DISH the nation's fourth facilities-based network provider to replace Sprint; the latter was being gobbled up by T-Mobile in a $26.5 billion purchase. Despite losing many of the 9.3 million subscribers it purchased in the Boost Mobile acquisition, DISH was building a standalone 5G network.
EchoStar merged with DISH on the last day of 2023 reuniting the latter with the former. EchoStar had been spun out of DISH and both firms were run by Ergen. DISH needed a better balance sheet as it was spending too much cash building its 5G network. Eventually, DISH Wireless LLC filed for bankruptcy. Additionally, the FCC threatened to investigate whether DISH was meeting network coverage milestones that the FCC imposed when DISH bought Boost Mobile.
DISH sells $40 billion of spectrum just in time
DISH faced huge fines and loss of the spectrum without compensation. Similar to a baseball team whose best player is about to be a free agent at the end of the year, DISH had to make a deal, and it did. It sold a combination of low and mid-band spectrum to AT&T for approximately $23 billion. SpaceX purchased $17 billion in direct-to-cell airwaves from DISH.
Construction of the 5G network EchoStar was building ended as did plans of DISH becoming the nation's fourth facilites-based network provider. Instead, Boost Mobile is now a hybrid MVNO using its own core network routing software while AT&T and T-Mobile provide the cell towers for radio coverage.
Ergen's mobile dreams are still alive
But this is not how Charles Ergen's mobile dreams end. Using his special purpose acquisition company (SPAC) CONX, Ergen is buying MVNO MobileX for $200 million. A SPAC is a shell company designed to help another company, in this case MobileX, become part of a publicly traded enterprise without going through the IPO process itself.
Screenshot of the MobileX app for Android. | Image by PhoneArena
MobileX will be owned by Ergen's CONX, Peter Adderton, and Verizon. The carrier is MobileX's MVNO partner and MobileX customers will use Verizon 5G and LTE service. Verizon is said to own a small percentage of MobileX leaving Ergen and Adderton in charge.
Analyst Roger Entner, close to MobileX founder Peter Adderton (who founded Boost Mobile in 2000) told Fierce Wireless, "MobileX does not have a lot of subscribers, but Charlie [Ergen] admired the disruptive business model." MobileX believes that most wireless customers overpay for unlimited data plans that they do not fully use.
MobileX employs AI to create a custom pay-as-you-go plan
When you first sign up with MobileX, AI analyzes your mobile data usage, Wi-Fi habits and more. After 10 days, a custom plan is suggested. You can choose a pay-as-you-go approach or pay per month. Video streaming quality and additional data can be managed on the app.
Ergen has recently admitted that Boost Mobile has "treaded water" over the last four years. We will have to see whether the plans to combine Boost Mobile and MobileX pay off.
Enjoy reading about EchoStar and DISH? Check out these articles:
- FCC's Carr puts the squeeze on EchoStar
- EchoStar is off the hook
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