Dish Is Seeking Better Terms on Boost Deal With T-Mobile
(Bloomberg) -- When Dish Network Corp. Chairman Charlie Ergen forged a deal last year to acquire Boost from Sprint Corp. -- the takeover target of T-Mobile US Inc. -- the hope was it would lead to a new nationwide wireless carrier.
But Ergen, famous for his hard-nosed negotiations, has more demands before the transaction gets done.
With the July 1 deadline approaching, T-Mobile and Dish have yet to come to terms on the purchase of Boost, Sprint’s pay-as-you-go wireless business. The divestiture of that unit is a key requirement placed on T-Mobile as a condition of its $26.5 billion takeover of Sprint.
Dish is expected to pay about $1.4 billion for Boost. The deal, which includes seven years of access to T-Mobile’s network, was coordinated by Justice Department antitrust chief Makan Delrahim in order to help create a fourth wireless carrier and foster more competition. But there’s at least one hitch, as Ergen said on an earnings call last month: All Boost customers should be able to use T-Mobile’s network.
“We don’t necessarily want to put people in the Sprint network and then have to go back and switch them later,” Ergen said.
If Ergen gets his way, qualifying Boost customers would trade in current phones and be issued new devices provisioned for T-Mobile service. Sprint had the weakest service of the four nationwide carriers, and what remains of that network is either being dismantled or integrated into the T-Mobile system.
T-Mobile didn’t have an immediate response.
Ergen is notoriously tough in these situations. When satellite-TV rival AT&T Inc. wanted Dish to renew its contract with its newly acquired prize HBO, Dish refused. It was the first time in HBO’s 47-year history that any TV provider said no to the premium service.
At the table with T-Mobile, Ergen might be holding the stronger hand. While Dish needs Boost to jump-start its entry into the retail wireless business, Ergen has said it isn’t essential (he has his own wireless airwaves). But T-Mobile needs to complete the divestiture to comply with the Justice Department’s takeover agreement. And given that the referee in this case is Delrahim, who is very interested in a successful deal, Ergen is hard to bet against, said Roger Entner, an analyst with Recon Analytics.
“Charlie will squeeze and T-Mobile might squeal, but in the end I think he’ll get most of what he wants,” Entner said.
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