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Dish Network
Corp.
leads the race to gather 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 issue.
Charlie Ergen, Executive Chairman of Dish, has tried to convince the antitrust authorities that the wireless merger is bad for competition. Now, he says the best way to remedy this situation is to force mobile operators to cede more activities to Dish.
Its satellite TV operator is in talks to buy prepaid subscribers and wireless spectrum licenses from the fusion partners, officials said. Discussions should continue over the weekend and Dish may not reach an agreement. Other contenders include cable operators
Communication Charter
Inc.
and
Altice USA
Inc.
people said.
Officials from the Ministry of Justice want the buyer to keep together the assets he buys, said people familiar with the subject. Dish, meanwhile, has accumulated a large amount of wireless spectrum over the years that it must use or risk losing its licenses. Analysts at New Street Research estimate that at least $ 35 billion in spectrum is at risk.
Ergen met this week with the chairman of the Federal Communications Commission, Ajit Pai, and the head of the antitrust department of the Ministry of Justice, Makan Delrahim, and "explained the need for a minimum of four operators mobile phone network in the country, "according to a document filed Friday by the FCC.
The T-Mobile-Sprint deal was approved by the FCC president last month after the merger partners decided to divest Sprint's Boost Mobile Prepaid brand and invest in broadband in rural areas. But the Justice Department is still pushing companies to get rid of more assets, such as wireless spectrum licenses, and make other commitments that would preserve competition in the cellphone market, according to the Ministry of Justice. people familiar with the discussions.
Now, T-Mobile has agreed to buy Sprint, the US wireless industry is about to be dominated by three major players. But how did we go from giant terrestrial monopoly to four competitive cell phone companies? Illustration: Shaumbe Wright / WSJ
Ergen has spent nearly 10 years looking for other telecommunications companies, participating in talks to acquire MetroPCS, Clearwire and DirecTV, among other companies. These companies eventually rejected his offers 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 still attacked Sprint.
The failed relationship has given Mr. Ergen the reputation of someone who "wrestles defeat by the throat," said Jonathan Chaplin, an analyst at New Street Research.
"He ruined everything in the past by playing his hand too much," Chaplin said, although he described Ergen as "exceptionally brilliant and perfectly capable of getting a good deal."
Last year, Sprint chose to join T-Mobile as part of an all-stock deal that would leave the US with three nationwide cellular carriers instead of four. The agreement seeks to achieve economies of scale in a mature US market characterized 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 one of the first opponents of the deal and funded a group of lawyers and economists who argue that the deal would hurt competition.
Dish does not offer mobile phone service and does not compete directly with the mobile operator. The company is building a 5G backbone using the spectrum it has auctioned over the past decade.
Its core business, the sale of satellite television services, has suffered from the failure of its customers. Last year, the company lost nearly a million subscribers, which pushed the sector to diversify. Consolidation of mobile and satellite services could help Dish compete with cable companies that can already sell broadband.
Englewood, Colorado, connects its cellular network to the Internet of Things network, which includes vehicles, sensors and other connected devices. The company has not identified any significant commercial customers for the network. It plans to upgrade this skeleton network later in a second phase of construction to address a wider customer base in the coming years.
This strategy has placed Dish on the line of fire for FCC officials, who fear that Ergen will squat over valuable waves. Last year, the agency had warned the company that it could withdraw some of its licenses unless it can credibly demonstrate that it is waiting for it to use them to serve their customers.
Handing Dish to a mobile phone company could solve problems for many parties. T-Mobile and Sprint would have all the necessary federal authorizations to close their merger, a powerful weapon in ongoing litigation against a group of attorneys general of democratic states. State officials broke with the Justice Ministry this week and took legal action to block the rapprochement, saying it would raise prices and reduce innovation.
The divestment would also allow Ergen to run a mobile phone company that complies with FCC regulations. He acknowledged that his company did not have the capital to complete its entire network.
"But this capital could take many forms," Ergen said last year during a conference call. "And like anything else, when you have a very good business plan, you can find partnerships and / or capital to make these things happen."
Write to Drew FitzGerald at [email protected], Sarah Krouse at [email protected] and Brent Kendall at [email protected]
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