Feb. 18, 2020, 10:33 a.m. EST

Dish Wireless Needs Partners after Escaping T-Mobile Limit

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    DISH Network Corp. Cl A (DISH)
  • X
    T-Mobile US Inc. (TMUS)

or Cancel Already have a watchlist? Log In

Feb 18, 2020 (Market Realist via COMTEX) -- The US wireless phone market is about to change in a major way due to Dish Network /zigman2/quotes/207505872/composite DISH -5.20% . Last week, T-Mobile /zigman2/quotes/204659678/composite TMUS +2.30% and Sprint won court approval to proceed with their merger, which will benefit Dish.

T-Mobile and Sprint agreed to sell some of their wireless assets to Dish. The company will use the assets as a springboard to launch its wireless operation.

Dish will join cable providers Comcast, Charter Communications, and Altice USA. They have also launched wireless operations in a bid to diversify their revenue sources.

T-Mobile attempted to curb Dish wireless

Notably, Dish needs $5.0 billion to purchase the assets that T-Mobile and Sprint will divest. Also, the company will need about $10 billion to build a nationwide wireless network.

The company's wireless venture will require an investment of about $15 billion. However, Dish doesn't have that much readily available . The company will have to borrow or bring in partners to help fund its wireless venture. Banks are willing to extend as much as $10 billion in loans to Dish for its venture. But bringing on board equity partners would be a cheaper way to raise funds for the business.

T-Mobile wanted to slap Dish's venture with certain restrictions . For example, the company sought to limit the stake Dish could sell in its wireless business to 5.0%, according to The New York Post . Doing so would restrict the company's ability to raise equity financing for its wireless venture. Such a financing curb could force Dish to borrow large sums to plug its funding gap.

But taking huge debt could strain Dish's balance sheet for a long time. The strain could delay the realization of benefits from the wireless business. T-Mobile didn't succeed in its attempt to curb Dish's equity fundraising for its wireless business. Dish is free to sell up to a 50% stake in its wireless business. However, Dish can't partner with T-Mobile's existing rivals like AT&T or Comcast.

Dish has considered bringing technology giants Amazon /zigman2/quotes/210331248/composite AMZN -1.40% and Google /zigman2/quotes/202490156/composite GOOGL -3.74% as partners in its wireless venture . Amazon finished 2019 with $36.4 billion in cash reserve . Google parent exited the year with $120 billion in cash reserve . Therefore, the deep pockets could help Dish realize its wireless dream.

Shrinking traditional pay-TV market

Dish's move into wireless comes as its main pay-TV business shrinks amid the rise in online video streaming. The company has been losing subscribers from its legacy satellite television business.

COMTEX_362156788/2648/2020-02-18T10:32:41

/zigman2/quotes/207505872/composite
US : U.S.: Nasdaq
$ 18.95
-1.04 -5.20%
Volume: 1.22M
April 1, 2020 11:44a
P/E Ratio
7.31
Dividend Yield
N/A
Market Cap
$10.46 billion
Rev. per Employee
$851,331
loading...
/zigman2/quotes/204659678/composite
US : U.S.: Nasdaq
$ 85.83
+1.93 +2.30%
Volume: 3.64M
April 1, 2020 11:44a
P/E Ratio
21.35
Dividend Yield
N/A
Market Cap
$71.90 billion
Rev. per Employee
$832,885
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,922.43
-27.29 -1.40%
Volume: 1.50M
April 1, 2020 11:44a
P/E Ratio
83.67
Dividend Yield
N/A
Market Cap
$970.59 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,118.44
-43.51 -3.74%
Volume: 741,590
April 1, 2020 11:44a
P/E Ratio
22.78
Dividend Yield
N/A
Market Cap
$835.52 billion
Rev. per Employee
$1.39M
loading...

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.