Dish explores divestiture of Boost Mobile

It looks like Dish might divest its Boost Mobile assets. A SPAC set up by Boost Chairman Charlie Ergen and Jason Kiser — called CONX Corp. — filed an SEC document yesterday saying it had begun preliminary discussions with Dish Network regarding a potential business combination involving Dish’s retail wireless business.

Although Dish has other retail wireless MVNOs including Gen Mobile, Republic Wireless and Ting Mobile, it’s primary MVNO is Boost Mobile.

The filing says CONX will announce additional details if, and when, a definitive agreement is executed.

Dish provided the following statement to Fierce Wireless: “We regularly evaluate ways to enhance our business. As part of this process, we are in regular dialog with interested parties who may assist us in accomplishing our goals, including recently preliminary conversations with CONX Corp. There can be no assurance that these preliminary discussions will lead to a transaction nor as to the structure or terms of any such transaction.  We do not intend to provide further updates unless and until those discussions conclude in agreement as to a transaction.”

Among hurdles such as due diligence and shareholder and board approvals, the parties would also have to receive regulatory approvals. Dish’s ownership of Boost stemmed from a three-way deal for T-Mobile to acquire Sprint in 2020. And all of that was scrutinized by the Department of Justice.

New Street Research, which was the first to notice the SEC filing last night, said, “We always thought that separating a low multiple retail business from a high multiple network infrastructure made sense.”

According to New Street analyst Jonathan Chaplin, if the transaction is completed, Boost would become the anchor tenant on Dish’s new 5G network as it gets built out. Currently, Boost rides on the networks of T-Mobile and AT&T via wholesale agreements.

“Giving Boost capital to grow through this structure increases the odds they will be successful, which in turn increases the prospects for the success of networks,” wrote Chaplin. “Though splitting off Boost cuts Dish off from an easy source of cash flows, it should improve visibility into the margin profile of the underlying network infrastructure business; this could in turn improve Dish’s access to capital.”

New Street is only giving the prospective deal fifty-fifty odds but says it would be “a good deal all around if it happens.”

Dish has struggled with Boost. In the second quarter it dropped another 210,000 retail wireless net subscribers, bringing its total number of wireless subscribers to 7.87 million. The company has lost 1.1 million wireless customers since it acquired Boost Mobile.

Dish Chairman Charlie Ergen was asked directly during the company’s Q2 earnings why he didn’t just divest Boost.

Ergen acknowledged that owning Boost is not a necessity and that the real value of Dish is in its own 5G network. “I guess the answer is it’s not a necessity but today we prefer that it belongs with us,” he said.

That statement was made in August. But now, perhaps Ergen has decided he doesn’t prefer to own Boost.

A commenter on Twitter did note that Ergen is involved with both CONX and Dish and warned CONX investors about “self-dealing.”

The Boost Mobile prepaid brand has about 4,500 retail stores nationwide. Dish has been touting a new Boost Infinite postpaid brand. It’s unknown what would happen to the plans for Boost Infinite if Boost is divested.