October 12, 2022
A company created by Charlie Ergen, the founder of Dish Network, is now in talks to purchase Boost Mobile from Dish Network.
CONX "has begun preliminary discussions with Dish Network Corp. regarding a potential initial business combination involving Dish's retail wireless business," CONX told the SEC. Dish's retail business primarily involves Boost Mobile but also stretches across other brands including Ting Mobile and Gen Mobile.
Continued CONX: "The company expects to announce additional details regarding the potential business combination if and when a definitive agreement is executed. No assurances can be made that the parties will successfully negotiate and enter into a definitive agreement, or that the Transaction will be consummated or the timeframe for such consummation."
CONX is one of a number of special purpose acquisition companies (SPACs) launched in recent years. Such companies are designed to match a seasoned management team with investors, and can offer private companies a quick path to cash without the hassle of an IPO.
When Ergen launched CONX in 2020, the company said it would raise up to $1 billion to acquire a company "that can benefit from our operational expertise in the technology, media and telecommunications industry, including the wireless communications industry."
Ergen is the founder of Dish Network and is one of the world's richest people.
Figure 1: (Source: Dish)
According to one analyst firm, the move may be a wise one for Ergen.
"If the transaction is completed, it would give Boost capital to accelerate growth, in a structure where the investment doesn't deprive Dish of capital for funding the network deployment. Boost will become the anchor tenant on Dish's network as it gets built out. With little more than growth in MVNO payments from Boost, Dish's fully deployed network will nearly break even; any additional wholesale or enterprise revenues would be gravy," wrote the financial analysts at New Street Research in a note to investors late Wednesday.
The New Street analysts continued: "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. 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."
Through a 2019 agreement with T-Mobile and the Department of Justice, Dish agreed to build a nationwide 5G network over the next few years. The agreement also included an option for Dish to purchase Boost Mobile – and roughly 9 million Boost customers – from T-Mobile. Dish did that in 2020 for around $1.4 billion.
Since then, Dish has been shedding Boost customers – it ended the second quarter with less than 8 million Boost customers. Dish also warned investors that it may need to raise more cash to finance the construction of its 5G network.
Dish is using MVNO agreements with T-Mobile and AT&T to keep its Boost customers connected while it builds its own 5G network.
Dish has also said it will launch a new Boost service plan sometime later this year under the Boost Infinite brand.
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