The wireless deal between Dish Network (NASDAQ:DISH) and T-Mobile appears to be stalling. Dish’s chairman, Charlie Ergen, wants to renegotiate certain aspects of the agreement. The deal’s progress has slowed down as the deadline to complete the transaction approaches.
Ergen is Dish’s executive chairman and largest shareholder. He’s known to be a tough negotiator.
Dish and T-Mobile clash
Dish’s main business has been selling satellite television subscriptions. However, the company wants to diversify. Cord-cutting continues to shrink the traditional pay-TV market. Dish has been losing its pay-TV customers in recent years.
In the diversification quest, Dish identified the wireless market. In July 2019, the company became the third party in the $26 billion T-Mobile and Sprint merger deal. To approve the merger, regulators demanded that T-Mobile divest Sprint’s prepaid brands, including Boost Mobile, as well as other wireless assets like Spectrum. Dish agreed to purchase Boost and other assets that T-Mobile and Sprint would divest for a total of $5.0 billion.
For Dish, the assets would provide a springboard to launch its own wireless business. Dish would join Comcast (NASDAQ:CMCSA), Charter (NASDAQ:CHTR), and Altice as pay-TV providers that have diversified into the wireless business. Indeed, Dish secured an arrangement allowing it to offer wireless services on T-Mobile’s network for seven years as it builds its own wireless infrastructure.
Dish and T-Mobile might not be able to complete the deal. According to Fox Business, Dish thinks the coronavirus outbreak reduced the assets’ value. As a result, the company wants to purchase Boost for less than originally agreed. Frustrated by Dish’s bid to lower Boost’s purchase price, T-Mobile has been reaching out to other potential buyers. T-Mobile faces the July 1 deadline to complete the divesture of Boost.
Dish needs about $15 billion
According to Bloomberg, Dish doesn’t see T-Mobile’s Boost as being essential to its wireless venture. The company wants T-Mobile to drop the assets’ price.
Dish wrapped up the first quarter with roughly $3.0 billion in cash following a successful rights offering. The company needs $15 billion to purchase the T-Mobile assets and build its own nationwide wireless network of 5G type.
Dish stock has rallied lately. Investors have piled into Dish due to better first-quarter earnings and hopes about the wireless venture. At $31 per share, Dish stock has risen nearly 60% over the past three months.