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

Why Did Dish Network Stock Rise Yesterday?

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Feb 18, 2020 (Market Realist via COMTEX) -- Dish Network /zigman2/quotes/207505872/composite DISH +0.11% stock rose more than 10% in pre-market trading on Tuesday. The stock rose more than 5.0% soon after regular trading opened. Dish stock rose due to news that the court approved the T-Mobile /zigman2/quotes/204659678/composite TMUS -2.88% and Sprint merger.

In December, a federal court in New York heard an antitrust lawsuit seeking to block the T-Mobile and Sprint merger. A coalition of more than a dozen states filed the lawsuit. They argued that the merger would reduce competition and hurt consumers. However, the court rejected the states' argument. Instead, the court cleared T-Mobile and Sprint to proceed with the merger .

Sprint stock rose by more than 72% in pre-market trading due to news about the court's approval. The gains continued into regular trading. The stock rose more than 72% in the early hours. T-Mobile stock rose by more than 10% in the early hours after positing a similar gain in pre-market trading.

Dish's wireless venture could become a reality

Dish could benefit from the T-Mobile and Sprint merger. Specifically, Dish will use the assets that T-Mobile and Sprint will divest as a springboard for its wireless business. Among the assets that T-Mobile and Sprint will divest is a prepaid wireless brand with more than 8.2 million subscribers . The prepaid subscribers that Dish will inherit pay about $30 a month. The company will start with wireless operations that already make over $3.0 billion in annual revenue .

Therefore, the merger will help Dish jumpstart its wireless business. The company won't have to start recruiting customers at the beginning. Comcast /zigman2/quotes/209472081/composite CMCSA -1.22% , Charter Communications /zigman2/quotes/201656355/composite CHTR -0.43% , and Altice USA started from scratch when they entered the wireless market .

As of the closing on Monday, Dish stock was about flat compared to where it stood when the company became part of the T-Mobile and Sprint merger deal on July 26, 2019 . Uncertainty about the fate of the merger deal tempered investors' appetite for the stock.

Dish's legacy pay-TV business faltered

Dish is going into the wireless market as its main pay-TV business falters. The company's legacy satellite pay-TV business has been losing customers, which caused its revenue and profit to shrink. Dish lost 66,000 customers in its legacy pay-TV business in the third quarter. Meanwhile, the revenue fell 7.0% YoY (year-over-year) and the profit fell 18% YoY in that quarter.

In December, Dish Chairman Charlie Ergen said that the company secured commitments from banks to finance the wireless business. The company needs $5.0 billion to purchase the assets that T-Mobile and Sprint will divest. Dish needs an additional $10 billion to build its own nationwide 5G network. However, the company only has about $2.6 billion in cash reserve .

So far, the stock has gained about 4.0% year-to-date.

COMTEX_362156869/2648/2020-02-18T10:33:26

/zigman2/quotes/207505872/composite
US : U.S.: Nasdaq
$ 18.98
+0.02 +0.11%
Volume: 3.04M
April 3, 2020 4:00p
P/E Ratio
7.32
Dividend Yield
N/A
Market Cap
$9.93 billion
Rev. per Employee
$851,331
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/zigman2/quotes/204659678/composite
US : U.S.: Nasdaq
$ 81.98
-2.43 -2.88%
Volume: 8.38M
April 3, 2020 4:00p
P/E Ratio
20.36
Dividend Yield
N/A
Market Cap
$70.25 billion
Rev. per Employee
$832,885
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/zigman2/quotes/209472081/composite
US : U.S.: Nasdaq
$ 33.95
-0.42 -1.22%
Volume: 19.31M
April 3, 2020 4:00p
P/E Ratio
11.99
Dividend Yield
2.71%
Market Cap
$154.58 billion
Rev. per Employee
$513,625
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/zigman2/quotes/201656355/composite
US : U.S.: Nasdaq
$ 433.80
-1.86 -0.43%
Volume: 1.03M
April 3, 2020 4:00p
P/E Ratio
57.69
Dividend Yield
N/A
Market Cap
$91.09 billion
Rev. per Employee
$445,245
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