SoftBank Offered To Help Fund Dish Wireless Network -- WSJ
December 19 2019 - 3:02AM
Dow Jones News
By Drew FitzGerald
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 (December 19, 2019).
SoftBank Group Corp. offered to help finance Dish Network
Corp.'s construction of a new cellphone network intended to shore
up competition if the merger of the nation's No. 3 and No. 4
wireless carriers closes, Dish's chairman said Wednesday.
Charlie Ergen, who is also a Dish co-founder, finished
testifying Wednesday in support of T-Mobile US Inc.'s purchase of
rival Sprint Corp., arguing that the merger would allow his company
to enter the consumer wireless market as a stronger competitor than
Sprint. Mr. Ergen had said Tuesday that the satellite company's
plans were credible and could count on loans of $10 billion from
three separate bank lenders based on letters they issued Dec.
9.
A group of state attorneys general is suing to block the merger
of Sprint -- which is controlled by Japan's SoftBank -- and
T-Mobile, arguing the combination would hurt competition.
JPMorgan, one of the banks lined up this month to lend Dish
cash, was offering to back the company even earlier. A June 27
email from a JPMorgan banker displayed in court Wednesday arranged
for financing of Dish's purchase of Sprint prepaid brand Boost
Mobile with SoftBank's support.
Mr. Ergen said the company was seeking a $1 billion
general-purpose loan at the time and thought the SoftBank
assistance "would give us margin" because the Japanese investment
company can borrow at a "much lower rate" that could save Dish $70
million to $100 million. The Justice Department also approved the
funding arrangement, which remains contingent on the T-Mobile
purchase of Sprint closing, Mr. Ergen added.
Dish swooped in during the summer with an offer to buy spectrum
and customer accounts from Sprint to help satisfy federal antitrust
concerns about the merger.
The Dish proposal was enough to win the U.S. Department of
Justice's support for T-Mobile's takeover of Sprint, but a
coalition of state attorneys general were unconvinced and took the
wireless merger to a federal trial in New York. The states have
argued that Dish, which serves no cellphone customers today,
wouldn't be a credible player in the wireless market, while Sprint
still has tens of millions of customers.
Dish has told investors it can use cash on hand to pay for
Sprint's prepaid customer accounts, including Boost Mobile, along
with certain wireless spectrum licenses. But Mr. Ergen said Tuesday
that Dish will need $8 billion to $10 billion to build its
nationwide network over several years.
Attorneys for the states challenging the wireless merger have
argued that SoftBank founder Masayoshi Son could use the
multinational company's financial resources to help rescue Sprint,
which has been losing customers for years. They cited an email from
Mr. Son telling executives "if we need to pay back most or all of
bonds, I am willing to pay back all of those" for Sprint.
Sprint Chairman Marcelo Claure, who is also SoftBank's operating
chief, testified Monday that the wireless carrier couldn't draw on
Mr. Son's company for more capital. "Sprint is meant to be a
self-funded entity," Mr. Claure said.
Another Sprint executive testified earlier that the company
wouldn't be viable in its current form within the next two years.
Sprint Chief Executive Michel Combes said Monday that the company
faced a "vicious cycle" that affects its ability to afford
financing.
Dish had about $14 billion of net debt at the end of September,
while Sprint's net debt stood at $33 billion.
Mr. Ergen, joined in court Wednesday by senior executives and
family members, also fought back against evidence presented by
California's deputy attorney general that suggested his past
tangles with federal regulators and judges made him unreliable.
Judge Victor Marrero asked the Dish boss more specific questions
about the company's future under the merger arrangement, including
whether T-Mobile might try to put Dish out of the wireless
business.
Mr. Ergen said it would be difficult for T-Mobile to wage a
price war against his company because its Justice
Department-brokered agreement has "a formula to protect us."
The judge also asked Mr. Ergen about his view of the wireless
market's "status quo" if T-Mobile fails to buy Sprint.
"We're still going to enter the marketplace" if that happens,
the Dish chairman said, "just maybe not to consumers."
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
December 19, 2019 02:47 ET (07:47 GMT)
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