Company created by Dish Network Chairman Ergen seeks to buy Boost Mobile
Dish Network acquired Boost Mobile in a transaction that was related to T-Mobile's $26 billion purchase of Sprint which closed in 2020. During the roughly two years that it took regulatory agencies like the FCC and the DOJ to sign off on the deal, Dish Network was named by the FCC to be the "fourth nationwide facilities-based network competitor" to replace Sprint. In other words, the U.S. government wanted to make sure that another company would replace Sprint to keep the number of major stateside wireless providers at four.
Dish is looking to sell Boost Mobile to a company created by Chairman Charles Ergen
This was music to the ears of Dish co-founder and Chairman Charles Ergen who had a goal to run a wireless firm. He went after Sprint and during a battle for the carrier between Dish and Softbank in 2013, Dish lost out. But that didn't stop Dish from spending over $6 billion a few years later to purchase low-band spectrum (600MHz) making it the second largest winning bidder after T-Mobile (which spent $7.9 billion during the auction).
Dish is looking to sell service under the Boost Infinite name later this year
As part of an agreement with T-Mobile and the FCC, Dish bought Sprint's pre-paid offerings such as Boost Mobile in a transaction valued at $5 billion. The deal gave Dish 9.3 million pre-paid customers living in all 50 states and Puerto Rico. The Pay-TV firm also took over 400 employees and 7,500 retail stores along with 14MHz of Sprint's low-band 800MHz spectrum. Since starting operations, Dish has seen more than 1.3 million customers leave and it now has fewer than 8 million subscribers.
According to LightReading, Ergen is reportedly working on a deal that would see Dish sell Boost Mobile to a company controlled by the Dish Chairman. The company, CONX, is a SPAC (special purpose acquisition company) that was created in 2020 for the express purpose of acquiring or merging with an existing company. CONX filed form 14A with the Securities and Exchange Commission (SEC).
In the filing, the Ergen-controlled company wrote "The Company has begun preliminary discussions with DISH Network Corp. regarding a potential initial business combination involving DISH's retail wireless business. The Company expects to announce additional details regarding the potential business combination if and when a definitive agreement is executed."
When Ergen launched CONX two years ago, he said that it would raise as much as $1 billion dollars that would be used to buy a company "that can benefit from our operational expertise in the technology, media and telecommunications industry, including the wireless communications industry."
Analyst's report says that completing this deal could increase the odds of success for Boost
Telecom research firm New Street thinks that having the SPAC acquire Boost could help it thrive. A New Street analyst wrote that "Giving Boost capital to grow through this structure increases the odds they will be successful which in turn increases the prospects for the success of networks. Though splitting off Boost cuts Dish off from an easy source of cash flows, it should improve visibility into the margin profile of the underlying network infrastructure business; this could in turn improve Dish's access to capital."
The report, written to New Street customers yesterday, says, "Boost will become the anchor tenant on Dish's network as it gets built out. With little more than growth in MVNO payments from Boost, Dish's fully deployed network will nearly break even; any additional wholesale or enterprise revenues would be gravy."
Currently, Dish has MVNO (Mobile Virtual Network Operator) deals with T-Mobile and AT&T. The two carriers provide their networks to Boost customers allowing the company to sell wireless service while Dish builds its own 5G network. The satellite firm has said that it will offer a new Boost service plan later this year. It already has named this service Boost Infinite.
During the summer, we told you that Boost Infinite plans to offer 5G service at a lower price than Verizon, T-Mobile, and AT&T. Right now you can visit the Boost Infinite website and by leaving your name, zip code, and e-mail address, you can receive an email message that will alert you when the service becomes available.
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