Dish expected to walk away from T-Mobile's 800MHz spectrum

According to some analysts, Dish Network's tightening financial situation will likely prevent the company from paying T-Mobile $3.59 billion to purchase its 800MHz spectrum licenses. If Dish does not buy the licenses, it will owe T-Mobile a $72 million fee for walking away from the deal.

"We essentially have an option to buy that, but it's going to depend on how we are financially," explained Dish Network Chairman Charlie Ergen during his company's recent quarterly earnings call. "It's not a must-have for us."

Ergen explained that Dish would easily be able to put that spectrum into action because the 5G radios the company is deploying can already support the spectrum band. Dish has already installed its radios atop about 5,000 cell towers around the country. The company hopes to increase that number to around 15,000 over the next year or so.

Figure 1: (Source: Dish)

"We like the spectrum," Ergen said of T-Mobile's 800MHz. "It's a nice-to-have, for sure."

Terms and conditions

The spectrum at issue is a nationwide 13.5MHz chunk in the 800MHz band that was owned by Sprint. A complex agreement inked in 2019 among Dish, T-Mobile and the US Department of Justice paved the way for T-Mobile to acquire Sprint in a transaction that closed in 2020.

Under the terms of that 2019 agreement, Dish has an option to purchase the 800MHz spectrum from T-Mobile for $3.59 billion. However, Dish must close the purchase within the next year or so – and, if it decides not to purchase the spectrum, it must pay T-Mobile the $72 million fee.

According to the analysts at New Street Research, Dish's tightening financial position "means they wouldn't pursue it [the spectrum] in the current environment."

T-Mobile probably isn't too worried though, considering it recently signed a $3.3 billion roaming agreement with Dish.

Options, and more options

Dish isn't starved for choices when it comes to acquiring additional spectrum.

As noted by the New Street analysts, the company could make another play for some AWS-3 spectrum licenses initially offered by the FCC in a 2015 spectrum auction. Two bidding entities called Northstar Wireless and SNR Wireless purchased roughly $3.4 billion worth of the spectrum licenses in the auction. But after it ended, the FCC ruled that the two entities should not have received a 25% discount intended for small businesses because they were linked financially to DISH.

Dish has been fighting with the FCC over that decision for years. But a recent court ruling appears to have halted Dish's efforts, paving the way for the FCC to re-auction the licenses. However, the New Street analysts don't expect Dish to attempt to purchase the licenses in a new auction.

Separately, Dish is also among the companies registered to bid in the FCC's ongoing 2.5GHz spectrum auction. Again, though, Dish isn't expected to bid heavily. Instead, most expect T-Mobile to walk away with the bulk of the licenses.

Finally, Dish continues to try to convince federal regulators to allow 5G operations in the 12GHz band, where it has substantial holdings. It's unclear how the FCC might rule in that proceeding.

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