As Dish Network’s Charlie Ergen took the stand at the T-Mobile/Sprint merger antitrust trial this week he shared some additional details about the satellite provider’s planned network build.
Ergen said Dish plans to deploy 10,000 sites for its 5G network by the end of 2022, which analysts at New Street Research called “modestly negative” for towers, as the firm had previously assumed Dish would build 30,000 sites by 2023.
“However, it now appears that building to only 15,000 sites by 2023 is the most likely scenario,” wrote the team led by Spencer Kurn in a Wednesday morning research note.
Dish is seen as key to Sprint and T-Mobile’s merger fate since the “fix” reached by the U.S. Department of Justice includes Dish entering the wireless scene as a viable fourth competitor.
Dish had committed to 15,000 sites within the 2023 timeline as part of the DoJ’s merger-related agreements, which among other things include Dish acquiring Sprint’s prepaid assets and 850 MHz spectrum, and entering into a favorable MVNO agreement to ride on T-Mobile’s network as the company builds its own wireless infrastructure.
Some view Dish as a spectrum hoarder since it already owns spectrum licenses worth billions of dollars, and only in the last couple of years started unveiling plans for a narrowband-IoT (NB-IoT) and 5G network build to meet FCC deadlines or risk losing its licenses. Ergen at trial said Dish has deployed 750 of the 1,000 sites it needs for the NB-IoT network, New Street noted.
As part of its deal with Sprint/T-Mobile, Dish committed to extended FCC buildout timelines, promising to cover 70% of the population with a 5G network by June 2023. New Street Research analysts had seen the 15,000-site benchmark as “a milestone that Dish would easily clear on its path to 75,000 sites over time” when it assumed 30,000 sites would be hit by 2023.
But based on Ergen’s comments, the firm thinks organic growth for towers will be slower than previously thought. “We had expected Dish to contribute $0.7BN to tower industry revenue by 2023; we are now lowering our estimate to just $0.3BN,” wrote the team.
While the New Street team said Ergen’s comments lend support its stance that organic growth in the tower industry is set for a decline over the next few years, the firm expects that to re-accelerate due to C-Band deployments in 2023.
“Of course, if the T-Mobile / Sprint merger is approved, organic growth for the towers will accelerate over the next two years from a flurry of amendment activity, but we think it is more likely than not that the merger gets blocked,” the New Street team said.
Speaking at an investor conference earlier this month, American Tower SVP of corporate finance and treasurer Rod Smith said the tower company sees a successful T-Mobile/Sprint merger as a neutral- to positive event long-term, with an increase in overall investment from the new T-Mobile as it expands the network. If the deal doesn’t happen, Smith said it would likely be “business as usual.”
Attorneys general from 13 states and the District of Columbia that are suing to block T-Mobile and Sprint’s merger have questioned Dish’s credibility as fourth competitor and its ability to build out a nationwide 5G network.
During a Dec. 9 press call before the start of the trial, Paula Blizzard, California deputy attorney general said “Allowing Dish to enter the market as a new fourth competitor will not restore the lost competition. Dish is a struggling satellite TV firm with no experience running a mobile wireless business – and no current mobile wireless business. It will not be a new robust wireless operator that can replace Sprint.”
LightShed Partners analysts Walter Piecyk and Joe Galone, meanwhile, wrote earlier this week that they believe things are going better than expected for T-Mobile at trial, and now see Dish’s MVNO deal as more attractive than initially thought. They noted that many investors think Ergen “can be the swing factor in the trial.”
Of course the deal with Dish is contingent on T-Mobile and Sprint merging, and although Dish must wait for a final decision before proceeding with a 5G network build, the company has already moved forward with issuing requests for proposal (RFPs) and information (RFI) to vendors.
During Ergen’s testimony, which continues today, he defended Dish’s commitment to building a network, saying he has letters from three banks, each “highly confident” it could lend Dish $10 billion to fund its wireless network build, according to the Wall Street Journal.