As we said at the weekend, T-Mobile’s parent company, Deutsche Telekom, rejected a lawsuit that was delaying an agreement between T-Mobile, Sprint and Dish Network. The latter would buy Boost Mobile and a certain spectrum from the operators and, in return, create a new competitor to replace Sprint. And that would give the US Department of Justice enough peace of mind to allow the $26.5 billion mergers between the third and fourth-largest wireless service provider in the country.
If Dish reaches an agreement with Deutsche Telekom and Sprint, it will enter into an MVNO agreement with T-Mobile that will allow it to use the provider’s network to sell cellular services to consumers in the US. At the same time, Dish will start building its 5G network. Initially, Deutsche Telekom wanted to limit Dish’s access to a small percentage of the T-Mobile network and also requested the MVNO agreement to be concluded if a third party purchased 5% or more of Dish. The German telecommunications giant fears that a large partner, like Google or Amazon, will take the opportunity to collaborate with Dish and use the MVNO agreement to quickly become a major competitor to the new T-Mobile faster than expected. In other words, Dish could compete with T-Mobile using its own network for the duration of the MVNO agreement, which should last three years.
Could Dish End Up Being A Scarier Challenger For T-Mobile Than Is Currently Sprint?
CNBC reports that while this move is risky for Deutsche Telekom, it has decided to eliminate its objections because it believes that going ahead without Sprint is worse than setting Dish as a new competitor. This is because T-Mobile seeks to be the first in the US. In the construction of a national 5G network. And with the average 2.5 GHz Sprint accumulation, T-Mobile will be able to use its low-bandwidth 600 MHz radio waves and the very high-frequency mmWave spectrum combined with the Sprint mid-band spectrum for its 5G network. Verizon is planning to stick mmwave radio waves, which travel shorter distances and do not penetrate buildings, as does the low-band spectrum that T-Mobile has. This means that Verizon will take longer to complete a 5G coast-to-coast network. AT&T plans to follow T-Mobile’s strategy of combining the mmWave spectrum and the spectrum below 6 GHz for its 5G service.
Some analysts of Wall Street believe that allowing Dish Network to enter the wireless business, a long-standing dream for its CEO Charles Ergen, is not a smart decision for T-Mobile. For example, Craig Moffett of MoffettNathanson states that Dish could be a more frightening competitor to T-Mobile than Sprint. After all, if T-Mobile fails, Sprint could remain a weak rival for T-Mobile and could continue to lose customers. Instead, a merged T-Mobile-Sprint should have something to do with a company that started from scratch like Dish, which would probably be ready to undermine T-Mobile’s prices from day one.
“If Dish enters the market with a large amount of capacity and no meaningful subscriber base of [average revenue per user] to defend, they would have every incentive in the world to be a disruptive discounter. One need not believe in a follow-on Dish deal with Amazon, Google or a cable operator to see this as bad for the market, and indeed, worse than the ‘no deal’ scenario for T-Mobile.”- Craig Moffett, analyst, MoffettNathanson
Those familiar with the thought of T-Mobile say they believe that Dish’s wireless service will lose a lot of money in the early years. This is because, under the MVNO agreement, Dish will have to give 50% of the revenue generated to T-Mobile. But things will change when Dish has its own 5G network in operation. Analysts say that Dish’s network will be more efficient than others because it will be built specifically for the 5G service. Since it will be brand new, Dish’s network will not be used to connect its customers with 2G, 3G or even 4G data rates.
There is another problem that could block the merger. A lawsuit filed by 13 attorneys general and the District of Columbia tries to block the transaction. However, a process may not start before October. Unless the judge overseeing the case issues a temporary restraining order, T-Mobile and Sprint could get the green light to end this long-lasting drama this week.
- Dish In Talks To Buy Boost, $6 Billion Deal Could Allow T-Mobile-Sprint Merger
- US Consumers Are Buying 5G Phones However They Do Not Have Coverage Yet
- The president of the FCC Pai recommends the approval of the T-Mobile-Sprint merger
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