They say timing is everything, which is why the move for DISH to begin issuing $1 billion of stock to institutional investors as its deal to purchase Boost Mobile approaches has raised more than a few eyebrows. DISH has been positioning itself to make a name in the wireless sector for many years by quietly purchasing spectrum that can be deployed for 5G networks as the technology continues to grow. This with the recent opportunity due to a government-regulated merger between T-Mobile and Sprint has made a way for the company to begin entering the space by purchasing Boost Mobile from Sprint to maintain the necessary competition that would appease government regulators. When the initial acquisition target date of June 1st fell through, many began to question if the deal could become finalized at all, but DISH and T-Mobile have continued to press through negotiations and have arrived at a $1.4 billion sale price set for July 1st. Now, DISH has to find a way to fund the cost.
Since announcing the deal, DISH has maintained that it is confident, despite any hiccups outside forces such as COVID-19 may throw its way, that it would be able to afford the deal due to its projected revenue streams and cash on hand. It has also been revealed that during a court case last December that Sprint’s parent company SoftBank would help DISH find more advantageous financial terms to accompany its deal including better interest rates that came from the holding company backstopping the purchase. This move could allow DISH to finish the purchase of Boost Mobile without spending a large amount of cash or could be part of a move that will see the purchase through without spending any cash at all.
Though it is not certain that the $1 billion debt is related to the Boost deal and the $1 billion DISH is raising could be completely separate, many believe DISH may be using the money to finance the deal and finding the remaining $400 million from the terms of renting deals it hopes to renew with T-Mobile. To help T-Mobile deal with excess traffic during the coronavirus pandemic, DISH offered its 600 MHz spectrum to T-Mobile free-of-charge. Whether or not that will qualify DISH for a $400 million credit remains to be seen; however, the deal is set to expire right as the Boost Mobile acquisition is set to take place. Many are speculating that DISH may look to receive $400 million upfront for a multi-year rental deal rather than taking a yearly payment as it rents spectrum to T-Mobile to increase its capacity.
Deal or no deal, DISH is on the clock as it works to become America’s newest major wireless carrier. Part of the terms for DISH purchasing Boost Mobile was its ability and requirement to cover 70% of the United States with its 5G network. A costly and bold endeavor to say the least, but DISH continues to prove its seriousness about providing wireless services by finding unique ways to fund its goals and push forward with its plans to enter the wireless space.
Source: Fierce Wireless