Dish and ATT sign wireless deal

Discussion in 'General DISH™ Discussion' started by juan ellitinez, Jul 19, 2021.

  1. juan ellitinez

    juan ellitinez Icon/Supporter DBSTalk Gold Club

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  2. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    Dish Network said on Monday it had signed a multi-year deal worth at least $5 billion to make AT&T the primary network services partner for its wireless customers.

    Under the terms of the 10-year deal, AT&T will provide voice, data, messaging services to customers of Dish-owned mobile virtual network operators (MVNOs) Boost Mobile, Ting and Republic Wireless.

    MVNOs do not own networks but rent capacity from established operators to sell services to their customers.

    Dish’s retail wireless customers throughout the United States will also get access to voice and data roaming services on AT&T’s network, the company said.
     
  3. glrush

    glrush Cool Member/Supporter DBSTalk Gold Club

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  4. NashGuy

    NashGuy Well-Known Member

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    This deal with AT&T is a long-term lifeline for DISH, ensuring that they'll be a credible national player for at least a decade. They have to get their own 5G network built out to cover 70-75% of the US population by June 2025, which they can do with towers in densely populated metro areas. But the rural parts of the country, where the remaining 25-30% live, constitute many times more area than the metros, and that's where having AT&T (or Verizon) as a fallback is really important.

    Not sure whether this is such a great deal for AT&T, who's now fallen to third place among the big three wireless providers. It does give them some cash which they need badly right now, thanks to all the debt they've incurred from bad deals, but it's also helping to ensure that they have another significant rival. Good for us consumers, though!

    This is sort of like what Verizon has done with the Xfinity Mobile and Spectrum Mobile, both of which are really growing their sub bases. But those two so far are pure MVNOs, with all their traffic running on Verizon's network. I think both plan to build out their own spectrum in certain dense areas, and maybe also make better use of their own public wifi networks, so that they don't rely completely on Verizon's network. But I don't think either will build out networks anything close to what DISH must do over the next four years.

    As for a future deal to merge DirecTV and DISH (and maybe DirecTV Stream and Sling too), I think they'll definitely try. Just a matter of whether the DOJ lets it happen. Might require a long-term agreement to keep prices under certain levels, at least for consumers in rural areas who would be most impacted by seeing their cable TV choices drop from two providers to just one.
     
  5. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    According to people familiar with the matter, Dish founder and billionaire Charlie Ergen reached the final stages of selling his company to AT&T in 2007. When he pushed for a last-minute change in terms, the deal fell apart.
    ...
    Choosing AT&T brings the companies closer together and further increases the likelihood that Ergen and AT&T Chief Executive John Stankey attempt a Dish-DirecTV merger down the road, according to Jonathan Chaplin, an analyst at New Street Research.

    Chaplin said in a note to clients that one of the biggest obstacles to a merger has been the notion that “AT&T hates Dish.” Some of those bad feelings stem from the botched 2007 merger, when AT&T felt Ergen had reached a handshake deal and negotiated in bad faith, according to people familiar with the deal who asked not to be named because the discussions were private.


    I don't recall the 2007 failed deal making the news before ... I could have missed it.

    As for DISH buying DIRECTV, I don't believe that is necessary. But perhaps this could be a sign of a warming of the relationship between AT&T and DISH and may lead to satellite license sales and cooperation between DISH and DIRECTV.

    Then again, it could be a case of $5 billion buying a little forgiveness. Income is more important than grudges. :)
     
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  6. NashGuy

    NashGuy Well-Known Member

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    Can't really see a plausible scenario where there's some kind of asset sale, or cooperation, between DISH and DTV short of the two businesses being merged under one company. I do think that company would likely be jointly owned by DISH and AT&T (with TPG possibly still holding a stake).
     
  7. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    Short term, I believe the FCC would permit the transfer of some assets (the 14 transponder licenses and associated satellites) from DIRECTV to DISH. That would provide additional cash for the operation of DIRECTV while saving DISH from needing to lease the Canadian location at 129. Since DIRECTV has effectively abandoned use of 110 and 119 DIRECTV could remain effective competition to DISH without those licenses and not set off all of the red flags that a merger of the services would trigger.

    Long term, I believe the total number of satellite customers will need to drop considerably before the FCC (and other agencies) would see a merger as not having a negative effect on the marketplace. There is already enough competition on the streaming side ... Sling and DIRECTV Stream could merge and there would still be effective competition. But I don't see the FCC et al approving a satellite merger within the short term.

    I am looking at the situation from the perspective of what is possible. Eventually one company? Sure. But not soon.
     
  8. NashGuy

    NashGuy Well-Known Member

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    Yeah, I doubt the FCC would have a problem with any of that but I also doubt that such a deal is something DISH particularly wants or needs (especially if they believe, as Ergen clearly does, that the two businesses will eventually fully merge anyhow).

    Yeah, probably right on that. But the number of sat customers continues to drop. By 2023, after DTV has lost NFL ST, and further incremental gains have been made in rolling out broadband to rural areas, it's *possible* that we could see the current administration approve a merger with various conditions attached. But it very well may have to wait until 2025.
     
  9. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    AT&T|DIRECTV has done the best they can at lowering their numbers. It has taken DISH over two years to lose a million satellite subscribers. Slackers. :D

    2Q 2021 was better (less net loss) for DIRECTV than 2Q last year so my estimate of when DIRECTV would lose its last customer through attrition has changed. Now 7-8 years away. Combined there are likely just over 20 million satellite customers today. At current rates numbers should slip below 10 million in five years. I'm not sure what the magic number is for "too big to merge".
     
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  10. NashGuy

    NashGuy Well-Known Member

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    Yeah, a combined DTV+DISH would definitely have more customers than Comcast cable TV, which has just under 19 million, making it the nation's largest MVPD. But I don't think that would be the main concern; I'd say the government would be more worried about eliminating competition for a slice of US consumers (10-15%) whose only choices for cable TV are DTV and DISH. Which is why I think that if the two were to merge, they would have to agree to some kind of price guarantee, at least in rural areas, such as holding their average price steady and tying future annual price hikes to the overall rate of inflation in consumer prices.
     
  11. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    Being the only service of a type makes it more important that there are two services of that type until it is no longer possible to maintain both. The government may let two satellite systems merge if there was a third that would allow effective competition. They allowed DIRECTV to merge with USSC (no overlap in services anyways) and DIRECTV to buy PrimeStar (DISH remained competition). DISH was able to buy licenses from SkyAngel and Voom when they went out of business (DIRECTV remained competition).

    Today DISH has 8.6 million satellite subscribers, DIRECTV has 15.4 million Premium TV subscribers (11-12 million satellite?). Would each company having 5 million still be too big to merge? Would one company having 7 million and the other company having 3 million be a better mix for a merger? In my opinion, the lower the total number and the higher the imbalance the more likely the government will approve a merger.

    We are still years away from a merger being an issue. I wonder how much effect losing NFL ST exclusive will be on DIRECTV. Right now they need the billions of dollars more than they need the exclusive. There are those who thought DISH could not survive without RSNs. Losing HBO as a premium was also bad - but they still lost under one million subscribers over the past two years. Perhaps DIRECTV will easily adjust to life without NFL ST as an exclusive.
     
  12. NashGuy

    NashGuy Well-Known Member

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    Yeah, I don't think losing NFL ST is going to be absolutely ruinous to DTV's residential subscriber count (although it may be for their commercial sub count if they can no longer offer it to sports bars). But it will definitely hurt. I don't know how many residential subs they have that stick with DTV only because of NFL ST but it's not insignificant. Maybe 5%? 10%? Losing NFL ST as a promotional freebie to get new subs will also hurt their sign-ups.

    I feel like DISH has always appealed to consumers more on pricing, while DTV has been more the "premium" service particularly appealing to sports lovers. So I can see how DISH losing RSNs and HBO wouldn't hurt them as badly as the same things might impact DTV.
     
  13. glrush

    glrush Cool Member/Supporter DBSTalk Gold Club

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  14. JosephB

    JosephB Icon

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    Rural customers not having choice I think would still be on the FCC and DOJ's radar right now because of the current push to expand broadband to areas that don't have any. Also, the current administration is much more likely to hold AT&T/DirecTV/Dish accountable for what a merger would do to the marketplace vs. another administration from a different party that might let them do whatever they want

    However, things are changing rapidly, and there are carrots that AT&T (and even Dish) can give in addition to changes in the overall marketplace that might grease the skids a little bit

    First is more widespread availability of Starlink. Once anyone in the country can get Starlink, DirecTV and Dish have a somewhat credible argument that streaming is an option nationally. It's not perfect, because not everyone will be able to get Starlink (multi-family units, obstructions, etc) and we don't know truly how well it can or will scale

    The next is AT&T and Dish can commit to expanding fixed, in-home internet access in rural areas. I think the government would be satisfied with it being wireless, so it's not even like AT&T would have to deploy fiber out to rural areas. I don't know what the number would have to be, but there's probably some target they could promise that would get the FCC/DOJ to approve

    And then the layer on top of both of those is the dramatic changes in the streaming world since the last time they tried this. If internet was ubiquitous I think streaming is now at a point that the government would be OK with letting traditional MVPDs merge. So the real hurdle is for DirecTV/Dish to overcome areas without internet access

    I don't think AT&T themselves are *too* worried about it either way. With DirecTV being a separate company they can slowly sell off shares in the market, or sell more shares to TPG. Merging with Dish is not the only exit strategy (although their wording and tone during the announcement of the spinoff definitely makes it seem like they want to sell the remaining 70% in one go, and I suspect TPG does too--they're not in the business of actually running a business)
     
  15. JosephB

    JosephB Icon

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    It's almost a mirror copy of the arrangement between Verizon and Comcast/Charter. Comcast and Charter had been buying up spectrum intending to start their own cellular network just like Dish, but they decided it was too much work and sold that spectrum back to Verizon with the caveat that they get a pretty sweet MVNO deal, and now that they have a sizeable chunk of customers they are going to build out their own networks in the densest areas where they have the most customers

    Dish is turning over some of their spectrum to AT&T (not outright selling) and getting an MVNO deal, and will be able to focus their own build in urban areas just like Comcast/Charter

    AT&T is clearly aiming to get out of the business, whatever happens they will want to no longer have a stake. Whether that means an IPO selling shares on the open stock market or selling the company to Charlie, AT&T doesn't want to have a remaining stake in whatever happens next
     
  16. NashGuy

    NashGuy Well-Known Member

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    AT&T would've sold the entire thing already if they could have found a buyer. Best they could do was TPG offering to buy 30% (at a major loss versus what AT&T paid) and get half the board seats.

    What I'm saying is that I don't see any third company wanting to buy all of DTV or DISH or both. I think both companies are probably stuck with their satellite TV businesses, so if they merge, it'll be as a joint venture partially owned by both AT&T and DISH (and maybe a third party such as TPG).
     
  17. JosephB

    JosephB Icon

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    There's already a path for AT&T to get completely out of the business, and that's to do the same thing they did with WarnerMedia: Spin it out to shareholders. Regardless of what Charlie does with Dish, a merger between DirecTV and Dish would give AT&T the opportunity to issue its share of DirecTV to AT&T shareholders. And, a combination with Dish at current valuations would mean AT&T would own less than 30% of the combined entity (assuming it was merged with all of Dish, not just the TV assets of Dish)

    At 30% they could spin it out with little financial implication, or at the very least, no longer be required to include it in its financial reports
     

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