T-Mobile Delays Expected Deal With Dish; State Concerns Remain
T-Mobile/Sprint delayed an expected announcement (see 1907240062) of a deal with Dish Network Thursday. T-Mobile issued a news release less than an hour before a Q2 call with its CEO John Legere and others, saying the call was delayed. T-Mobile was ready to go and the holdup likely came from DOJ, which appears to be looking for state support, industry officials said. The deal with Dish was intended to address Justice interest in creating a fourth national wireless carrier to replace Sprint. Dish closed at $39.17, down 5.75 percent.
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Minnesota AG Keith Ellison, one of one of 14 colleagues who have filed a lawsuit to block the deal, signaled the states won’t give up. “I’m still very concerned that this mega-merger would hurt Minnesotans’ ability to afford their lives,” Ellison said. “Less competition in the wireless industry will mean higher prices, fewer jobs, and lower-quality service. This merger would especially hurt lower-income families, communities of color, and rural communities in Minnesota. Though my office is still fully reviewing this deal, we do not believe that Sprint selling off a small portion of its business to DISH Network will resolve the merger’s major problems.”
MoffettNathanson’s Craig Moffett said the state suit is unlikely to go away. “Replacing a competitor that is over-levered but has 50 million-plus subscribers, thousands of retail outlets, and, most importantly, some fifty thousand cell sites with ground facilities, with a new competitor that is equally levered but has no network, no cell sites, no ground facilities, one fifth as many subscribers, and only a temporary resale agreement … doesn’t sound very credible.” Moffett said the purported deal is “likely very bad news” for Dish investors. “We’ve warned for at least five years that if and when Dish’s spectrum holdings ever come to be viewed as an operating asset rather than an asset held for sale, well ... look out below,” the analyst wrote investors.
“Keep holding your breath,” said Wells Fargo’s Jennifer Fritzsche: “We continue to believe the potential divestitures to DISH help create a synthetic wireless competitor (and more a competitor than standalone Sprint with its current balance sheet).”
T-Mobile reported 1.8 million total net adds in Q2, up 11 percent over last year, and 710,000 branded postpaid adds, up 3 percent. Net income was $939 million, up 20 percent, with revenue of $11 billion.
The carrier plans to launch 5G “on a broad 600 MHz footprint later this year when compatible smartphones are available, and we expect to have the first nationwide 5G network in 2020.” T-Mobile spent $842 million in the FCC’s first two millimeter-wave auctions, which more than quadrupled its nationwide high-band holdings from 104 MHz to 471 MHz in the 24, 28, and 39 GHz frequency bands, the release said. The carrier upped guidance for 2019, projecting postpaid net adds of 3.5 million-4.0 million, compared to earlier guidance of 3.1 million-3.7 million.