Dish's actions dive into the approach of the Sprint-T-Mobile deal

Dish's shares fell 6% on Monday after the Sprint-T-Mobile deal moved closer to regulatory approval, reducing the chances Dish found a partner to help it develop its wireless spectrum. The stock had declined further, but its losses were reduced after Bloomberg announced that the Department of Justice was "backed up", approving the deal.

Ajit Pai, chairman of the Federal Communications Commission, said in a statement that he "will recommend to my colleagues that the FCC approves" the merger of Sprint and T-Mobile, which had culminated the year last to a $ 26.5 billion deal. Pai wrote that the companies had made commitments that would "substantially contribute" to the achievement of the FCC's goals of enhancing connectivity in rural America and advancing the development of 5G technology in the United States.

Continued consolidation of the wireless industry is a problem for Dish because much of the value of the company is encompassed in the wireless spectrum, which has spent about $ 20 billion for those purchases. recent years for the preparation of 5G. Dish, whose main business is satellite television, has never built its own wireless network and has failed to find a suitor for its assets.

Dish is under pressure to use a good part of its spectrum by March 2020, otherwise it risks being drawn by the FCC. The company tried to convince the regulators that it was proceeding with minimal construction and a detailed plan in place, but the FCC is not convinced and has rejected Dish's proposals.

Jeffrey Wlodarczak, an analyst at Pivotal Research Group, downgraded his rating on Dish to "suspend" his "purchase" Monday after Pai's comments. Wlodarczak said that if the Sprint-T-Mobile case was broken, it could have sparked a bidding war for Dish's specter between Verizon and T-Mobile.

But with Sprint and T-Mobile apparently getting closer to a merger, this "significantly delays the timing of a possible agreement on the DISH spectrum," wrote Wlodarczak, who is targeting a course in the US. action at $ 33, slightly below its current price. "Although VZ still seems absolutely in need of the DISH spectrum, it does not seem to have too much pressure to reach a deal in the short / medium term."

Dish's actions were being rallied, partly because of speculation that the Justice Department would escape the Sprint-T-Mobile deal for antitrust reasons. According to Bloomberg's latest report, citing a person familiar with the exam, the DOJ remains disturbed by the possible impact on competition.

Even after Monday's decline, Dish's shares are still up 33% in 2019. But the long-term trend is down. Dish has lost about half of its value in the last two years due to the deterioration of its core business and the view of investors that it has been in debt to assets in the spectrum that are not being sold. it would be difficult to monetize.

By the way, Dish announced Monday that it was spending about $ 800 million for the purchase of the satellite broadcast service and EchoStar operations. Dish and EchoStar are intrinsically linked. Charlie Ergen is the co-founder and one of the major shareholders of each. In 2017, Dish acquired EchoStar's assets for its Dish TV main service and Sling TV streaming service. He now acquires nine broadcast satellites and some real estate in exchange for 22.9 million Dish shares.

The transaction amounts to a shift in the financial burden. According to Wlodarczak, Dish disbursed about $ 577 million in satellite transmission and transmission costs last year, and is now outsourcing the expenses.

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