You might remember the story that we have been following for some time now about an option that T-Mobile granted Dish to buy 13.5MHz of low-band 800MHz spectrum. The option was given to Dish as part of the agreements that T-Mobile made with the FCC is order to get the regulatory agency to sign off on the wireless provider’s acquisition of Sprint. Originally, the option gave Dish until June 30th, 2023 to pay T-Mobile the $3.59 billion price for the airwaves. But due to Dish’s financials, the date had to be put off.
After some negotiations, Dish gave T-Mobile $100 million toward the purchase of the spectrum in exchange for a revised expiration date of April 1st, 2024. By coincidence, that happens to be the fourth anniversary of T-Mobile‘s closing of its acquisition of Sprint. This might be the easiest $100 million T-Mobile ever made because Dish, in a filing with the Securities & Exchange Commission (SEC) said that it cannot obtain the financing it would need to pay T-Mobile $3.59 billion by the April 1st deadline.
In the SEC filing Dish wrote, “Due to the relatively short time remaining before the 800 MHz purchase option’s expiration on April 1, 2024, we no longer believe it is a probability that we will exercise the option. Therefore, we reduced the probability weighted value of the spectrum option to zero.”
The expiration of the option will not have a big impact on Dish according to Recon Analytics analyst Roger Entner. The analyst notes that while the low-band 800MHz signals travel long distances, the amount of spectrum covered by the option was not enough to allow Dish to add extra capacity or provide additional services.
The recently combined Echostar/Dish Network warned in the SEC filing that there is “substantial doubt” that the company can continue as a going concern. With a combination of debt coming due in 2024 and the strong likelihood that it will burn through a “substantial amount of cash” in the next 12 months, it “raises substantial doubt about [the company’s] ability to continue as a going concern,” the company said in the filing.
While Dish said that it will pay debt maturing this month using cash on hand and cash flow, it says that it doesn’t have the cash on hand nor does it project that it will have the cash flow required to pay the November 2024 debt maturity “and subsequent interest on our outstanding debt.” That has led MoffettNathanson analyst Craig Moffett to state, “Dish’s business is spiraling toward bankruptcy.”
Dish lost 123,000 pre-paid subscribers during Q4 of 2023, a huge increase from the 25,000 pre-paid subscribers it lost during the same quarter a year earlier. Dish has 7.38 million Boost subscribers remaining and Moffett says that Dish has lost 2.6 million Boost subscribers since it started offering wireless service in 2020.
Moffett, the analyst, added, “To state the obvious, neither the Boost pre-paid business nor the nascent 5G business looks like a meaningful operating asset in the likely event of a bankruptcy. Spectrum salvage value is all there is here.”
