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

Dish Wireless Needs Partners after Escaping T-Mobile Limit

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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 +1.33% . Last week, T-Mobile /zigman2/quotes/204659678/composite TMUS +0.73% 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 +5.77% and Google /zigman2/quotes/202490156/composite GOOGL +2.02% 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
$ 33.50
+0.44 +1.33%
Volume: 2.35M
July 6, 2020 4:00p
P/E Ratio
16.18
Dividend Yield
N/A
Market Cap
$17.33 billion
Rev. per Employee
$851,331
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/zigman2/quotes/204659678/composite
US : U.S.: Nasdaq
$ 106.78
+0.77 +0.73%
Volume: 5.26M
July 6, 2020 4:00p
P/E Ratio
26.30
Dividend Yield
N/A
Market Cap
$131.33 billion
Rev. per Employee
$832,885
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,057.04
+166.74 +5.77%
Volume: 6.88M
July 6, 2020 4:00p
P/E Ratio
146.03
Dividend Yield
N/A
Market Cap
$1441.61 billion
Rev. per Employee
$359,671
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/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,499.65
+29.72 +2.02%
Volume: 2.24M
July 6, 2020 4:00p
P/E Ratio
30.26
Dividend Yield
N/A
Market Cap
$1001.65 billion
Rev. per Employee
$1.39M
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