Already facing some skepticism even before the COVID-19 pandemic crashed the global economy, Dish Network chairman Charlie Ergen’s quest to build a fourth U.S. wireless 5G network has come under serious doubt.
Just as Dish confirmed that it would lay off an unspecified number of workers, the New York Post quoted an unnamed source, identified as a part of Dish’s lending group for the network buildout, damning the project.
“I think whatever rosy projections Charlie had are now very questionable,” the source told the Post. “There is no financing to build a telecom network.”
Last summer, Dish and Ergen emerged as key catalysts in T-Mobile’s ultimately successful $26 billion bid to buy Sprint. Dish agreed to pay T-Mobile $5 billion to transform itself in the nation’s fourth major wireless carrier, thus alleviating U.S. Justices Department concerns about reduced competition.
Dish now owns T-Mobile’s pre-paid wireless business, Boost Mobile, along with its 9 million customers. The satellite TV operator also received more wireless spectrum, on top of the gobs it already owns. And it now has seven years to use T-Mobile’s broader wireless network, including its emerging 5G infrastructure, on relatively advantageous wholesale “MVNO” terms while building out its own 5G wireless infrastructure.
Dish also has a tight FCC deadline to build out that 5G network, needing to cover 70% of the country by 2023.
Ergen already caught flack for pegging the cost of the buildout at only $10 billion.
“Verizon spends $15 billion annually to maintain a network that they’ve already built. The idea that Dish might spend $10 billion (their own estimate on previous conference calls) and then somehow be finished is, well, just silly,” wrote MoffettNathanson analyst Craig Moffett.
In his staff-wide memo announcing the job cuts earlier this month, Dish CEO Erik Carlson expressed continued commitment to the infrastructure project. “We are committed to entering the wireless business, bringing full, standalone 5G to America, and delivering unparalleled innovation that will benefit U.S. consumers,” he wrote.
Meanwhile, other analysts aren’t so quick to write off Ergen’s determination.
“Two months of severe market uncertainty doesn’t really alter my view of a company to execute on a three-year plan,” Lightshed Partners analyst Walt Piecyk told The Post.
If it fails to meet the 2023 deadline, Dish could face $2 billion in fines and the forfeiture of $12 billion worth of wireless spectrum.
But in a note to investors, Goldman Sachs suggested that Dish could use an “act of God” clause to ease that commitment.
Notably, in December, while testifying in a Manhattan federal court to Dish’s abilities to replace Sprint as the No. 4 U.S. wireless carrier, Ergen included an interesting hedge in terms of what might prevent Dish from obtaining needed capital.
“Where the markets are today—if we don’t have another 9-11, God forbid—the banks are confident,” Ergen told the packed courtroom.
Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!
The smarter way to stay on top of the streaming and OTT industry. Sign up below.
Thank you for signing up to Next TV. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.