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Why Dish Needs a Wireless Network

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Dec. 24 2018, Updated 7:31 a.m. ET

Diversifying its business

Dish Network (DISH) is racing against the clock to develop a wireless network. Not only does the company face the risk of losing some of its spectrum if it doesn’t have a wireless network up and running by March 2020, but it also needs to develop a wireless network to diversify its business.

While its pay-TV peers Comcast (CMCSA) and AT&T (T) have a way to profit from cord-cutting by selling broadband services, Dish doesn’t have this privilege, as its business is currently mostly selling pay-TV subscriptions.

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Dish needs over $10 billion to build a 5G network

With a wireless network, Dish could diversify its revenue sources by selling wireless services in addition to TV subscriptions. But developing a modern wireless network isn’t cheap. T-Mobile (TMUS), one of the telecommunications operators preparing for a 5G network buildout, has said it could spend as much as $40 billion on network investments if it wins approval for its proposal to merge with Sprint (S).

On its part, Dish has estimated that it will need at least $10 billion to develop a 5G network, according to a report by FierceWireless. That amount reflects a huge capital requirement, whereas Dish exited the third quarter with only $1.2 billion in cash—down from $1.5 billion at the beginning of the year.

Teaming up with Amazon

Last year, the Wall Street Journal reported that Dish and Amazon (AMZN) had explored teaming up to develop a wireless network. The report said that such a partnership could see Amazon finance part of the cost of building Dish’s 5G network. In turn, Amazon could strike a deal that would allow it to bundle a discounted wireless plan with its Prime membership program.

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