5G and Beyond

Dish's new T-Mobile deal could be a blow to AT&T

Dish Network on Tuesday announced a new $3.3 billion agreement with T-Mobile that lowers the prices Dish must pay to put its customers onto T-Mobile's 5G network.

The financial analysts at New Street Research speculated that the agreement represents a "modest negative" for AT&T, which inked its own $5 billion network-access deal with Dish last year. According to the analysts, Dish now has less incentive to move its Boost Mobile customer traffic onto AT&T's network.

"It is a modest negative for the wireless carriers in general in that improved terms will allow Dish to be more aggressive," added the New Street analysts.

Dish and T-Mobile had announced a new agreement in February 2022, but in an SEC filing Tuesday, Dish said its latest agreement with T-Mobile is different from that deal.

"Dish will pay lower rates to T-Mobile, with these reduced rates applied retroactively to periods beginning January 22, 2022," Dish noted. The company added that it agreed to a minimum purchase commitment with T-Mobile of $3.3 billion over the next five years.

The fine print

In a release, Dish and T-Mobile said their new agreement "incorporates financial and operational changes, including improved pricing and enhanced roaming solutions for Dish 5G customers."

"We are pleased to have reached new terms with T-Mobile that provide Dish with the ability to be more competitive and to meet our customers' evolving needs," John Swieringa, Dish's wireless president, said in the release.

In its own SEC filing, T-Mobile explained that it will also "provide certain assistance" in moving Dish's CDMA Boost customers onto T-Mobile's 4G and 5G networks. Dish noted it its filing that it will gain another 100,000 Boost-branded customers from T-Mobile's former Sprint affiliates, Shentel and Swiftel, as well as Boost-branded customers who were previously part of the California Public Utilities Commission CARE program.

The new T-Mobile/Dish deal still requires approval from the US Department of Justice, which the companies said they expect to receive by August 14, 2022.

The New Street analysts wrote in a note to investors Tuesday that Dish paid T-Mobile a little less than $2 billion in 2021 for access to its network, which equates to $17 per subscriber per month, or about $2 per GB. The analysts estimate that Dish's deal with AT&T is closer to $1.50/GB, with a path to $1/GB over time. They said they believed Dish's new agreement with T-Mobile is likely in line with its $1.50/GB deal with AT&T.

(Source: Robert K. Chin - Storefronts/Alamy Stock Photo)
(Source: Robert K. Chin - Storefronts/Alamy Stock Photo)

"If Dish secured similar pricing from T-Mobile, their cost per sub could be cut by as much as 25%," the analysts wrote, which they said would save Dish around $1.5 billion in 2022 in roaming expenses. And that, they argued, will help shore up Dish's finances as it works to fund the construction of a nationwide 5G network.

Wheeling and dealing

Dish has effectively been pitting T-Mobile and AT&T against each other since entering the wireless industry in 2019. That was the year the company inked an agreement with T-Mobile and the Justice Department that gave Dish around 9 million Boost customers, a seven-year network access agreement with T-Mobile and a warrant to build its own 5G network.

Then, in 2021 Dish signed a "game-changing" network access deal with AT&T. Analysts saw the move as a potential blow to T-Mobile, considering it could reduce the amount of money that Dish might pay to T-Mobile if it began to shift its Boost customers onto AT&T's network.

Starting earlier this year, T-Mobile began improving its wholesale network offerings, inking new MVNO agreements with Altice, Google and Dish. "Growth is our priority," T-Mobile's Dan Thygesen told Light Reading recently. "Let's get people on the network."

It appears T-Mobile's willingness to lower its network-access pricing eventually resulted in the new deal between Dish and T-Mobile. The agreement also promises to end the rancor between the two companies, which came to a head last year over T-Mobile's plan to shutter the CDMA network it acquired from Sprint. That network hosts some of Dish's Boost customers.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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