Dish in Lead for Sprint, T-Mobile Assets -- WSJ
June 15 2019 - 2:02AM
Dow Jones News
By Drew FitzGerald, Sarah Krouse and Brent Kendall
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 15, 2019).
Dish Network Corp. is leading the race to scoop up assets that
the Justice Department says Sprint Corp. and T-Mobile US Inc. must
sell to save their $26 billion merger, according to people familiar
with the matter.
Dish Executive Chairman Charlie Ergen has been trying to
convince antitrust enforcers the wireless merger is bad for
competition. Now he is arguing the best way to remedy that is to
force the wireless operators to cast off more of the business to
Dish.
His satellite-TV operator is in talks to buy prepaid subscribers
and wireless spectrum licenses from the merger partners, the people
said. Discussions are expected to continue over the weekend and
Dish may not reach a deal. Other suitors include cable operators
Charter Communications Inc. and Altice USA Inc., the people
said.
Justice Department officials want the buyer to keep together
assets it purchases, people familiar with the matter said. Dish,
meanwhile, has amassed vast amounts of wireless spectrum over the
years that it needs to put to use or risk losing its licenses. New
Street Research analysts estimate at least $35 billion of spectrum
is at risk.
Mr. Ergen met jointly with Federal Communications Commission
Chairman Ajit Pai and Justice Department antitrust chief Makan
Delrahim this week and "explained the need for a minimum of four
nationwide mobile network operators," according to an FCC filing
posted Friday.
The T-Mobile-Sprint deal earned the FCC chairman's blessing last
month after the merger partners agreed to divest of Sprint's Boost
Mobile prepaid brand and to invest in rural broadband. But the
Justice Department is still pushing the companies to shed more
assets, such as wireless spectrum licenses, and make other
commitments that would preserve competition in the cellular market,
according to people familiar with the talks.
Mr. Ergen spent the better part of a decade in pursuit of other
telecom companies, joining talks to acquire MetroPCS, Clearwire and
DirecTV, among other firms. Those companies ultimately rejected his
overtures and joined T-Mobile, Sprint and AT&T Inc.,
respectively.
In 2013, he sought to buy Sprint. In 2015, he tried to buy
T-Mobile. Last year, he went after Sprint again.
The missed connections have given Mr. Ergen the reputation of
someone who "snatches defeat from the jaws of victory," New Street
Research analyst Jonathan Chaplin said.
"He's screwed it up for himself in the past by overplaying his
hand," Mr. Chaplin said, though he described Mr. Ergen as
"exceptionally bright and perfectly capable of extracting a good
deal for himself."
Sprint opted last year to instead join T-Mobile in an all-stock
deal that would leave the U.S. with three nationwide cellphone
carriers instead of four. The deal seeks economies of scale in a
mature U.S. wireless market dominated by Verizon Communications
Inc. and AT&T. Previous efforts, however, have been derailed by
antitrust concerns.
Mr. Ergen has long threatened to spoil the wireless deal. The
billionaire was among the deal's early opponents and has funded a
group of lawyers and economists who argue the transaction would
harm competition.
Dish doesn't offer cellphone service and doesn't directly
compete with either wireless carrier. The company is building a
bare-bones 5G network using spectrum it has amassed at auctions
over the past decade.
Its core business selling satellite-TV services has suffered as
customers defect. It lost nearly 1 million subscribers last year,
putting pressure on the business to diversify. Bundling cellphone
and satellite services could help Dish compete with cable providers
that can already sell broadband services.
The Englewood, Colo., company is wiring its cellular network
first for the Internet of Things market that includes vehicles,
sensors and other connected devices. The company hasn't identified
any major business customers for the network. It plans to later
upgrade that skeleton network through a second construction phase
to address a broader customer base in later years.
That strategy has put Dish in the crosshairs of FCC officials,
who are concerned that Mr. Ergen is squatting on valuable airwaves.
The agency last year warned the company that it could take away
some of its licenses unless it can credibly demonstrate it expects
to use them to serve customers.
Handing Dish a cellphone business could solve problems for
several parties. T-Mobile and Sprint would have all the federal
approvals they need to close their merger, a powerful weapon in
pending litigation against a group of Democratic state attorneys
general. The state officials broke with the Justice Department this
week and filed a lawsuit seeking to block the tie-up, arguing it
would raise prices and reduce innovation.
The divestiture would also let Mr. Ergen run a cellphone
business that satisfies FCC regulations. He has acknowledged that
his company doesn't have the capital it needs to finish its full
network.
"But that capital could come in many shapes and forms," Mr.
Ergen said last year during a conference call. "And like anything
else, when you have a really good business plan, you can find
partnerships and or capital to make those things happen."
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com, Sarah
Krouse at sarah.krouse@wsj.com and Brent Kendall at
brent.kendall@wsj.com
(END) Dow Jones Newswires
June 15, 2019 02:47 ET (06:47 GMT)
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