Dish Network (DISH) wasn’t the first-mover in the pay-TV marketplace. However, the company entered the pay-TV market and caused ripples. Although the pay-TV market is shrinking amid cord-cutting, Dish is still among the leading pay-TV providers in the US. By 2008, Dish held a 13.5% share of the pay-TV market in the US. The company’s share of the market rose to 15.1% in 2017. The projections show that the share will keep rising. We’ll discuss why Dish wireless might concern T-Mobile.
Dish’s wireless venture
Therefore, Dish could actually turn the tables on existing wireless leaders as it enters the phone services market. The company has struck a deal to purchase some spectrum and prepaid phone operations from T-Mobile (TMUS) and Sprint (S). Purchasing T-Mobile and Sprint assets will likely jumpstart the company’s wireless venture. First, the company will be adding more airwaves to its substantial wireless spectrum portfolio.
More spectrum for 5G deployment
The Spectrum acquisition is turning out to be a costly affair for operators building 5G networks. T-Mobile spent over $840 billion to purchase 5G spectrum in a recent government auction. Vodafone (VOD) expects its costs to rise this year. The company is investing in spectrum purchases for its 5G program. Therefore, adding more spectrum would likely boost Dish’s 5G network deployment program. The company is working against a deadline to roll out 5G network covering 20% of the US population by the end of 2022. By the end of 2023, the company’s 5G network should cover 70% of the US population.
Secondly, Dish is taking over prepaid wireless brands that already have millions of customers and generate revenues. The company will get Sprint’s prepaid wireless brands. At the end of the second quarter, Sprint had 8.6 million prepaid customers. Sprint’s prepaid customers pay an average of $32.15 per month for services. Therefore, Sprint’s prepaid phone businesses alone could generate over $3.3 billion in new wireless revenues for Dish.
Dish could use the additional revenues to speed up the development of its 5G network. With a 5G network, the company could draw more wireless subscribers quickly. The company estimates that it will require $10 billion to get its 5G network plan off the ground.
Dish has more than 12 million pay-TV customers, which include 9.6 million satellite television subscribers and 2.5 million Sling subscribers. Therefore, the company has a massive pool of potential customers for its wireless service.
Is T-Mobile concerned?
T-Mobile is concerned that Dish could become a tough challenger in the wireless marketplace. According to a Wall Street Journal report, T-Mobile explored restricting Dish’s ability to raise funds for its wireless venture. According to the report, T-Mobile wanted to block the company from selling parts of the wireless assets. Specifically, T-Mobile wanted to prevent the company from teaming up with a cable or technology company in its wireless venture.
Before the report about restricting Dish’s wireless funding sources, there had been media reports about Google (GOOGL) teaming up with the company. A report from the New York Post stated that Google explored backing Dish’s bid for the divested T-Mobile and Sprint assets. Also, Reuters reported that private equity group Apollo Global Management discussed backing the company’s wireless venture.