A lot is at stake for Dish Network (DISH) in the trial of the T-Mobile (TMUS) and Sprint (S) merger deal. If the deal succeeds, Dish’s wireless business will receive a huge boost. Dish stock jumped on July 26, the day the company announced it would join the T-Mobile-Sprint merger as a third-party. However, if the T-Mobile-Sprint merger deal flops, Dish’s wireless business could take a big blow. That could, in turn, weigh down Dish stock.
Dish stock gains after T-Mobile denies scheme
The trial of the state-led lawsuit against the T-Mobile-Sprint merger began on Monday and entered its third day today. Market reaction to Dish stock in light of the T-Mobile-Sprint merger trial has been mixed so far. Dish stock fell by 0.24% on Monday. Also, the stock dropped after the suing states asked the judge to block the T-Mobile-Sprint deal in their opening arguments.
However, Dish stock recovered some ground on Tuesday, ending the day up 0.06%. The stock gained after Deutsche Telekom CEO Timotheus Höttges explained what motivated the T-Mobile-Sprint merger deal. Deutsche Telekom is the parent of T-Mobile and the majority shareholder in the company. Also, Sprint’s parent is SoftBank.
Höttges told the court that T-Mobile and Sprint agreed to combine their operations in order to increase scale. He denied that the merger was motivated by a desire to reduce competition in the US wireless market, Reuters reported. In denying this anti-competitive scheme, Höttges challenged the premise of the state-led lawsuit against the merger.
Dish will have millions of customers with Sprint
If T-Mobile and Sprint defeat the state-led challenge to their merger deal, they will help Dish jumpstart its wireless business. Dish will purchase the assets that T-Mobile and Sprint will divest as part of an agreement with federal regulators.
Those assets include Sprint’s prepaid wireless brands, which finished the third quarter with 8.4 million subscribers. Sprint’s prepaid customers spend an average of $30.97/month on the network. So, that means Sprint’s prepaid business generates over $3.0 billion in annual revenue, which will now go to Dish.
Dish stock gained on July 26 after Dish revealed a deal for its wireless business with T-Mobile-Sprint assets. However, the stock declined by about 15% since announcing its arrangement with T-Mobile and Sprint. The decline in Dish stock can be attributed to uncertainty over the fate of the T-Mobile-Sprint deal.