TMUS T Mobile US Inc

By Drew FitzGerald, Sarah Krouse and Brent Kendall 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 15, 2019).

Dish Network Corp. is leading the race to scoop up assets that the Justice Department says Sprint Corp. and T-Mobile US Inc. must sell to save their $26 billion merger, according to people familiar with the matter.

Dish Executive Chairman Charlie Ergen has been trying to convince antitrust enforcers the wireless merger is bad for competition. Now he is arguing the best way to remedy that is to force the wireless operators to cast off more of the business to Dish.

His satellite-TV operator is in talks to buy prepaid subscribers and wireless spectrum licenses from the merger partners, the people said. Discussions are expected to continue over the weekend and Dish may not reach a deal. Other suitors include cable operators Charter Communications Inc. and Altice USA Inc., the people said.

Justice Department officials want the buyer to keep together assets it purchases, people familiar with the matter said. Dish, meanwhile, has amassed vast amounts of wireless spectrum over the years that it needs to put to use or risk losing its licenses. New Street Research analysts estimate at least $35 billion of spectrum is at risk.

Mr. Ergen met jointly with Federal Communications Commission Chairman Ajit Pai and Justice Department antitrust chief Makan Delrahim this week and "explained the need for a minimum of four nationwide mobile network operators," according to an FCC filing posted Friday.

The T-Mobile-Sprint deal earned the FCC chairman's blessing last month after the merger partners agreed to divest of Sprint's Boost Mobile prepaid brand and to invest in rural broadband. But the Justice Department is still pushing the companies to shed more assets, such as wireless spectrum licenses, and make other commitments that would preserve competition in the cellular market, according to people familiar with the talks.

Mr. Ergen spent the better part of a decade in pursuit of other telecom companies, joining talks to acquire MetroPCS, Clearwire and DirecTV, among other firms. Those companies ultimately rejected his overtures and joined T-Mobile, Sprint and AT&T Inc., respectively.

In 2013, he sought to buy Sprint. In 2015, he tried to buy T-Mobile. Last year, he went after Sprint again.

The missed connections have given Mr. Ergen the reputation of someone who "snatches defeat from the jaws of victory," New Street Research analyst Jonathan Chaplin said.

"He's screwed it up for himself in the past by overplaying his hand," Mr. Chaplin said, though he described Mr. Ergen as "exceptionally bright and perfectly capable of extracting a good deal for himself."

Sprint opted last year to instead join T-Mobile in an all-stock deal that would leave the U.S. with three nationwide cellphone carriers instead of four. The deal seeks economies of scale in a mature U.S. wireless market dominated by Verizon Communications Inc. and AT&T. Previous efforts, however, have been derailed by antitrust concerns.

Mr. Ergen has long threatened to spoil the wireless deal. The billionaire was among the deal's early opponents and has funded a group of lawyers and economists who argue the transaction would harm competition.

Dish doesn't offer cellphone service and doesn't directly compete with either wireless carrier. The company is building a bare-bones 5G network using spectrum it has amassed at auctions over the past decade.

Its core business selling satellite-TV services has suffered as customers defect. It lost nearly 1 million subscribers last year, putting pressure on the business to diversify. Bundling cellphone and satellite services could help Dish compete with cable providers that can already sell broadband services.

The Englewood, Colo., company is wiring its cellular network first for the Internet of Things market that includes vehicles, sensors and other connected devices. The company hasn't identified any major business customers for the network. It plans to later upgrade that skeleton network through a second construction phase to address a broader customer base in later years.

That strategy has put Dish in the crosshairs of FCC officials, who are concerned that Mr. Ergen is squatting on valuable airwaves. The agency last year warned the company that it could take away some of its licenses unless it can credibly demonstrate it expects to use them to serve customers.

Handing Dish a cellphone business could solve problems for several parties. T-Mobile and Sprint would have all the federal approvals they need to close their merger, a powerful weapon in pending litigation against a group of Democratic state attorneys general. The state officials broke with the Justice Department this week and filed a lawsuit seeking to block the tie-up, arguing it would raise prices and reduce innovation.

The divestiture would also let Mr. Ergen run a cellphone business that satisfies FCC regulations. He has acknowledged that his company doesn't have the capital it needs to finish its full network.

"But that capital could come in many shapes and forms," Mr. Ergen said last year during a conference call. "And like anything else, when you have a really good business plan, you can find partnerships and or capital to make those things happen."

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com, Sarah Krouse at sarah.krouse@wsj.com and Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

June 15, 2019 02:47 ET (06:47 GMT)

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