T-Mobile CEO will step down next year
T-Mobile announced that Legere will step down in May next year. Legere will pass the mantle to current COO Mike Sievert. Legere wants to complete the Sprint (S) transaction before he steps down. In April 2018, T-Mobile and Sprint agreed to merge their operations to create a stronger wireless provider in the US. As part of the merger, T-Mobile and Sprint agreed to drop down certain assets to Dish. The company will use the divested T-Mobile and Sprint assets to jumpstart its wireless venture.
Will Dish benefit?
On Monday, the increase in Dish stock indicates that investors think that the company will benefit from Legere’s exit. We’ll discuss two reasons why Dish investors think that his departure is positive.
Completing the merger is a top priority
The T-Mobile and Sprint merger will likely define Legere’s legacy. He has five months to complete the Sprint merger. Will he have a colorful legacy? Now that his exit is set, Legere might want to do everything possible to ensure that he delivers the Sprint deal.
Currently, the greatest obstacle for the T-Mobile and Sprint merger is opposition from a coalition of more than a dozen states. The states sued to block the merger. Notably, the case will go to trial next month. However, T-Mobile has indicated it might cut a deal with the states to avoid a potentially lengthy trial, which could delay the closing of the Sprint transaction. T-Mobile already talked Colorado and Mississippi into dropping their opposition to the T-Mobile and Sprint merger.
T-Mobile completing the Sprint transaction quickly would be a plus for Dish. The company will start selling wireless plans immediately after the merger closes.
T-Mobile might be less competitive
Legere’s untraditional competition strategies helped propel T-Mobile as the fastest-growing major wireless provider in the US. Although T-Mobile says Sievert will continue Legere’s strategy, Dish investors seem to bet that T-Mobile will be less competitive. A less disruptive T-Mobile might give Dish room to grow its wireless business quickly.
Dish stock has risen 17%
Dish stock has risen more than 47% YTD (year-to-date). The stock has risen 17% from the price that Dish founder and chairman Charles Ergen bought shares in August.