Approval for T-Mobile-Sprint merger could depend on Dish's mystery partner

Approval for T-Mobile-Sprint merger could depend on Dish's mystery partner
With the FCC and Justice Department signing off on the $26.5 billion merger between T-Mobile and Sprint, the only remaining obstacle standing in the way of the transaction closing is a trial that is currently playing out in a Manhattan courtroom. The plaintiffs are 13 state attorney generals and the AG of Washington D.C. who are seeking to block the merger because they say it will lead to higher prices. The states argue that reducing the number of major stateside carriers from 4 to 3 (a 25% reduction) will reduce competition in the industry.

The plaintiffs are not persuaded at all by the $5 billion deal that Dish has with Sprint that will make it the "fourth nationwide facilities-based network competitor" once the merger closes. Dish will acquire Sprint's prepaid businesses including Boost and Virgin Mobile and the 9.3 million subscribers that Boost has in the U.S. In addition, Dish will get 14MHz of Sprint's 800MHz spectrum, 7,500 retail locations, and 400 employees. It also will get the first crack at acquiring cell towers, networking equipment, and other wireless assets that Sprint will sell once the merger is official.

To allow it to hit the ground running, Dish will sign a seven-year MVNO agreement with T-Mobile which will allow it to sell wireless service under its name while building its own standalone 5G network. The plaintiffs argue that Dish Network and Chairman Charles Ergen are newbies in this industry and might not be able to replace Sprint if the merger is allowed. But former Sprint CEO Marcelo Claure told the judge on Monday that if the deal is blocked, the carrier will have to raise prices and borrow more money to survive.

The merger is likely to get the judge's approval if he believes that Dish will partner with a deep-pocketed partner

According to FierceWireless, the courtroom became electric yesterday when the lawyers discussed whether some of Ergen's testimony would have to be heard in private. That's because  Dish is reportedly in the midst of discussions with some big-name partners to help it enter the wireless industry. Dish has said all along that it would need a partner to help it build a wireless network that Dish says will cost it $8 billion to $10 billion. Ergen said in court that the company has three letters of credit for $10 billion each from three individual banks, Morgan Stanley, JP Morgan, and Deutsche Bank. A couple of names that have come up as possible partners are Google and Amazon.

Meanwhile, the attorney for T-Mobile parent Deutsche Telekom addressed the judge and said, "Your Honor ought to be aware of some of the discussions they’re (DISH) having with very exciting, very exciting potential strategic partners to work with them and to develop this product in a way that becomes a real serious competitive threat." And the attorney for Dish reportedly referred to these mystery partners as "some of the most successful companies on the planet." Yes, Google and Amazon would certainly fit that description.

New Street analyst Blair Levin says that the judge's decision might come down to whether or not he believes that Dish is in fact in discussions with some strategic partners. Levin stated that "We cannot know, nor can we guess what it means to be having 'discussions.' The big question to us is whether the judge looks at the confidential evidence and sees such discussions as likely to result in an actual deal or whether the evidence is more consistent with, in the words of a DT executive, 'another one of Charlie Ergen’s stupid bluffs.'" He added that if the judge believes that Dish will be able to enter into a partnership with a deep-pocketed partner, the odds of a ruling in favor of the T-Mobile-Sprint merger increase.



1. m32198

Posts: 3; Member since: Nov 05, 2019

It Should be proof to Americans with only Democrats opposing it will be a good merger for consumers.

2. JMartin22

Posts: 2415; Member since: Apr 30, 2013

Yeah, this is the one thing Democrats are on the wrong side of right now. Sprint will not be viable no matter how you spin it and it’ll just be the current duopoly manning the current status quo as it is. They really should do some more research into the wireless industry and educate themselves on the facts of the matter. This just seems like political grandstanding at the moment.

3. Crash3102

Posts: 1; Member since: Dec 19, 2019

I thought DISH is owned by AT&T seems like they have all the expertise and extra mvno from that network too. Seems like the Democrats don't want all the truth to come out. Sprint is a failing company in 2018 they were just over $40billion in debt. They have been selling off parts of the company to get out of the states. TMobile has to buy out the debt that is current at the time of deal. That is why TMobile is pushing for a different type of 5g network that will cover multiple types of bands it will take years to recover all of the buyout. Then again it might be what Google did when they bought out Motorola got the patents they wanted and sold the rest of Motorola out to another company. I'm sure there will be a deal that is not spoken yet to come if TMobile can acquire Sprint.

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