23 Apr Dish: We’re still going to buy Sprint’s Boost prepaid biz | Light Reading
A Dish Network official has confirmed to Light Reading the company still intends to purchase roughly 9.3 million prepaid customers under Sprint’s Boost brand, despite the pandemic. That transaction will position Dish as an MVNO of T-Mobile.
The action will immediately make Dish the nation’s second-largest MVNO, behind only America Movil’s TracFone in terms of customers. An MVNO essentially piggybacks on an existing wireless network: The MVNO provides services including activation, customer support and billing, while the network operator provides the underlying connectivity.
In Dish’s case, it will purchase Sprint’s Boost customers and then manage them on T-Mobile’s network, which T-Mobile has already started merging with Sprint’s network.
However, Dish declined to answer other questions about its broader wireless plans, including whether the COVID-19 pandemic would affect its ability to raise money for the construction of a nationwide 5G network or whether it would affect the physical construction of that network. Dish officials suggested the company would cover such topics during its upcoming quarterly conference call with analysts, which will likely be held next month.
Dish’s move into the wireless industry first through its $1.4 billion purchase of Boost and then via the $10 billion construction of a 5G network stems from its agreement with T-Mobile in 2019. As part of its effort to close its merger with Sprint, T-Mobile signed a transaction with Dish that essentially positions Dish to replace Sprint as the nation’s fourth wireless network operator.
However, there remains widespread skepticism that Dish which has accumulated a vast trove of spectrum but has not put it to use will follow through on its wireless strategy.
“Dish as 5G wireless savior looks even more far-fetched,” opined a Bloomberg columnist earlier this week, in outlining the many obstacles Dish will face in its 5G ambitions.
Dish, for its part, announced this week its first 5G vendor: Mavenir, which will supply the software that Dish said it would use to manage its 5G radio transmitters.
A wobbly prepaid play
Aside from Dish’s 5G aspirations, there’s equal skepticism that the company’s purchase of Sprint’s Boost customers will be successful.
“We have no reason to believe that Dish is attempting to renegotiate the $1.4 billion purchase of Boost Mobile, but the erosion of Boost’s business since the deal was cut and the Corona pandemic certainly raise questions,” wrote the Wall Street analysts at Lightshed in a recent post. “The bottom line is that Boost is no longer worth $1.4 billion let alone the loftier values our peers assigned to it a year ago.”
Similarly, the Wall Street analysts at MoffettNathason argued that, even if Dish does purchase Boost, it will get into a business on the downswing.
“Dish’s entry into the prepaid wireless business would have been challenging even under the best of circumstances. These aren’t the best of circumstances,” the analysts wrote in a recent note to investors. “Sprint’s Boost was already beset by sky-high churn even before the coronavirus crisis. Its customers skew towards lower income, urban, and, now (presumably) unemployed. Welcome to the wireless business.”
Added the analysts of Dish’s Boost future: “Our forecast calls for only a modest increase in gross additions, coupled with a meaningful increase in churn, all of which adds up to an accelerating rate of decline in overall subscribers. That’s right. We expect Dish’s prepaid MVNO will be yet another shrinking business for Dish.”
Dish already operates a troubled satellite TV business and a struggling video streaming division.
A Q3 closing at the latest
That said, Dish officials have promised to make a splash with the purchase of Boost. “As far as wireless pricing, yes, we do think we’d be disruptive, day one, as I said, not only because of attractive rates but also bundling capabilities that are addressed in the deal,” said Dish’s Tom Cullen said of the company’s acquisition of Boost though he made those comments last year, before the spread of COVID-19.
As for the mechanics of Dish’s purchase of Boost, the Wall Street analysts at New Street Research wrote that Dish will need to close the transaction no later than a month after the T-Mobile and Sprint merger closed, which happened April 1, or no later than 15 days after T-Mobile enables Dish to provision customers onto its network T-Mobile is required to do that within 90 days after the close of its merger with Sprint. It’s unclear whether that has happened yet.
“So, technically, the Dish/Boost closing could bleed into Q3, but most likely it will close in Q2,” wrote the analysts at New Street in a recent note to investors.
Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano
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