DISH Network has been in the news cycle a lot lately. While their satellite services have been under fire for various blackouts due to contract negotiations, the company seems to be thriving due to their recent deal with Sprint and T-Mobile. However, despite the U.S. Depart of Justice’s (DOJ) recent decision to approve the merger, the merger’s outcome is still very much up in the air. That ambiguity has many DISH stockholders wondering how the market is going to react.
For those who don’t know the background to this situation here is a quick primer. T-Mobile and Sprint are looking to merge into one company. However, that would bring the number of major wireless carriers in the U.S. from four down to three, which the DOJ believes is not fair to the consumer. The DOJ stipulated that they would approve the merger if another company (DISH) purchased enough assets from T-Mobile/Sprint to become a major wireless provider in their own right .
However, AG’s from over a dozen different states came together and filed a lawsuit attempting to block the merger. The suit needs to be resolved before the merger can actually be finalized.
Raymond James analyst Ric Prentiss currently predicts that DISH Network’s stock is going to go up regardless of how the merger comes out. According to Barron’s, Prentiss has upgraded DISH to buy a rating because he sees three possible outcomes for DISH.
Option one is the most likely option. In this scenario the Sprint/T-Mobile merger is approved and DISH gets to purchased their 9 million prepaid subscribers from Boost Mobile and the rights to keep DISH customers on the Sprint/T-Mobile infrastructure while DISH builds out their own 5G network.
The second option is that DISH actually gets a better deal than the DOJ offered for the Sprint/T-Mobile assets thanks to pressure from the state attorneys general suit. While that is a possible outcome, it is not necessarily a likely one.
The final option is that the T-Mobile/Sprint deal is shot down by the attorneys general suit and DISH doesn’t get the opportunity to purchase Sprint’s prepaid assets and spectrum. In this scenario, DISH is still seen as a major player and just waiting for the right opportunity. As a result, DISH will still likely experience a bump in their stock.
Only time will tell which, if any, of these options come to fruition. A trial date for the lawsuit that 13 different state attorneys general filed is set for December 9, 2019. Knowing that, it’s likely that this entire saga will come to an end within the next six months. It might be time to pick up some DISH stock.
Sources:
https://www.barrons.com/articles/dish-network-stock-will-gain-regardless-of-the-sprint-t-mobile-deal-analyst-says-51566839741
