Dish CEO Charlie Ergen has been sitting in a New York court room to defend the approval of the T-Mobile US-Sprint merger, but also insisting his company can compete in the cut-throat telco industry.
This week is a critical one for executives in both the T-Mobile US and Sprint businesses. For the next few days, these men and women will be face-to-face with the 14 Attorney Generals, led by New York’s chief prosecutor Letitia James, in a court case which will decide the future of the business.
With approvals being granted by the relevant regulatory authorities, the last hurdle the duo has to navigate is the lawsuit from the Attorney Generals. These 14 lawyers oppose the merger on the grounds of competition, but Ergen is the star witness for T-Mobile US and Sprint.
“We will compete with the largest operators in the United States, and we’ll compete from day one,” Ergen said in court.
Ergen believes the Dish mobile business will be live within 30 days of the T-Mobile-Sprint merger being approved. At this point, Ergen will get his hands-on Sprint’s prepaid business, Boost. The brand will continue in the pre-paid market for the short-term, though Dish plan to move into the post-paid segment sharpish.
This is perhaps what the judgement will lie on. Will the court believe Ergen? Can this CEO convince Judge Victor Marrero that Dish is a viable alternative to the Sprint business which currently exists?
Looking at the positive side of the argument, Dish has spectrum. It has been competing in the spectrum auctions for years and has a treasure trove, which is currently under threat. Dish has been told to use it or lose it. Another interesting factor is the financing; Ergen claims to have $10 billion lined-up in loans from the banks. Then there is the agreement with T-Mobile US. For the next seven years, Dish will be able to make use of the T-Mobile US network where it hasn’t deployed its own.
These are all interesting points to consider, but then you have to look at the other side of the equation.
Dish has never been in the mobile business. Will it be able to get an effective mobile service up-and-running within 30 days? We’re not too sure. Is $10 billion enough to fulfil the grand promises which have been made to gain approvals from the authorities? If Sprint currently has 50 million subscribers, will the Dish mobile proposition ever reach this mark to maintain the current levels of competition across the US?
These are all queries which will need to be answered. Ergen will be placed under cross-examination from the Attorney Generals, and there are plenty of threads to tug on to unravel this story.
The question which remains is can Ergen prove Dish is a viable replacement for Sprint to maintain the competitive environment which is present today? That is the question which this case rests on.