T-Mobile’s Business Push, Technology Advantages, and 5G Slicing with Daryl Schoolar

Full Transcript

Don Kellogg 0m10s

Hello, welcome to the two hundred and twelfth episode of the week with Roger, conversation between analysts about all things telecom, telecom, media, and technology by Recon Analytics. I'm Don Kellogg, and with me as always is Roger Entner. How you doing, Roger?

Roger Entner 0m22s

I'm great.

Don Kellogg 0m23s

So, Roger, a lot has happened over the last week, and, uh, a lot of that has had to do with EchoStar and Dish. So I thought we could do another episode in terms of the most recent developments and what's going on there. Tell us what's happening.

Roger Entner 0m36s

Well, you know, that's when you thought things get boring, they stop being boring. We had a set of announcements from both EchoStar and related DIRECTV in conjunction with TPG. As our friends of the show know, TPG owns 30% of DirecTV. And they announced that TPG would buy the other 70% that AT&T owns for $7,600,000,000 And then there was another announcement simultaneously that TPG is also doing business with EchoStar and Dish, right? We talked about this last week.

Roger Entner 1m27s

And so what TPG is doing here, it is buying the DISH satellite TV from EchoStar, and it's paying $1 plus an assumption of the debt. And then it wants to put Dish and DirecTV together as a sole entity for satellite television. Because satellite television is slowly but surely dying, and here we'll have then two swimmers cling to each other trying to swim better. Not sure how that will play out. Well, we know how it plays out in the long run, because satellite TV is slowly but surely dying.

Roger Entner 2m10s

And by the way, when Charlie Ergen came to the realization that satellite TV is going to die, in my opinion, that's when he invested into wireless spectrum, and that's how we are here with EchoStar's mobile endeavor no longer being called Dish Wireless, but Boost Wireless. And they're concentrating on that. So, there are a couple of interlocking parts. And the most important part is that the existing debt holders of DISHEcoStar have to agree to take a 20 to 40% haircut, and exchange their debt into the new debt of the new organization. With it, they become subordinate debt holders, which is inferior.

Roger Entner 3m1s

On top of it, what makes it particularly unpalatable for a lot of debt holders, As I said, taking a 20% to 40% haircut on their investment on the bonds. Whereas Charlie Ergen gets $1,500,000,000 out of this deal personally, right? And so without this exchange of the shareholders, this would all fall together. Oh, on top of it, TPG is also going to inject like another $2,500,000,000 of new financing in it, and all of these stuff. So if everything works out, then EchoStar is rid of satellite TV, but keeps the spectrum, keeps all of that stuff, has about three years of runway where they can make it, get more money, you name it.

Roger Entner 3m55s

As long as the debt holders agree to that share, that haircut, that will allow Charlie to walk away with or stay in the fight for $1,500,000,000 The shareholders rejected this before this announcement. It is everybody's guess if the bondholders are able to swallow this rather big pill of rewarding Charlie, you know for them basically losing 20 to 40%.

Don Kellogg 4m24s

Well the implication though is that they don't do this, then the value could go down even lower, correct?

Roger Entner 4m28s

If they don't do this, if they all stick together, the bondholders, the worst thing that can happen is the company declares bankruptcy, and the debt holders become the equity holders of the company. If you believe in the, you know, Boost Wireless fanboy community, then the spectrum is worth 40 something billion dollars, right? Or whatever number it is. In my opinion, they made the same argument with Sprint, where, oh my god, Sprint Spectrum is worth 40 something billion dollars, you know, this is what the company is worth, then T Mobile bought it for '26, right? Just because you paid something

Don Kellogg 5m14s

You could argue that T Mobile got a pretty good price for the Sprint assets.

Roger Entner 5m18s

Without a doubt. But looking at spectrum from an auction perspective, and then extrapolating out, or with small pieces, it's just a non sequitur. Also look at like what UScellular is going for, right? Again, it's not auction.

Don Kellogg 5m37s

Right. Or or just the difference between like what people paid for 3.45 versus c band. Right? I mean, even though they're adjacent, they're very different prices. Yeah.

Don Kellogg 5m45s

Point taken. Right? But I mean, I I think the idea here is kind of like, at what point is this ever going to turn around, if it is ever going to turn around?

Roger Entner 5m52s

Well, the thing is, if this goes through, it makes EchoStar a much cleaner business. It accelerated the funds that it would probably get by slowly killing DISH TV, and spinning it off in that new satellite TV organization that is then TPG owned. But in the end, the problem for Boost is not the network. The problem for Boost is that they have not been able

Don Kellogg 6m22s

To put people on the network, yeah.

Roger Entner 6m24s

And lower price, ain't it. And this is a cool five gs standalone work, ain't it either, right? Because otherwise customers would be flocking to EchoStar's mobile brands, and they're not. Meanwhile, they're running like crazy to somebody like Mint that gained in the last what, two years one and a half million customers. And all that going forward was, you know, Ryan Reynolds being himself in ads, right?

Roger Entner 6m55s

So this cleans it up. If the debt holders are agreeing to this, then Charlie Ergen wins again. EchoStar with its Boost mobile endeavors, couple more years to try to make this work. It's not going to be easy.

Don Kellogg 7m13s

Right. Well, Charlie's playing poker again, right? We'll see if he wins this round.

Roger Entner 7m18s

Well, but you know, as I've said before, you shouldn't count out Charlie Ergen. The guy has a terrific track record of pulling rabbits out of his hat, and having more escapes than Houdini. But even Houdini was caught at one point in time. I'm not betting against Charlie Ergen. Charlie is a fantastic business person who has done this over and over again.

Roger Entner 7m45s

You know, we'll see if this works out this time. At one point in time the dogs catch up to the rabbit.

Don Kellogg 7m51s

Well, it's certainly been the gift that keeps on giving in terms of podcast episodes. I'm sure

Roger Entner 7m55s

Absolutely, absolutely.

Don Kellogg 7m56s

The story is yet to be fully told, so we'll continue to cover.

Roger Entner 7m59s

We will talk about this for years to come. So thank you very much for that opportunity and giving us a reason to continue with this. Yeah. Exciting stuff, right?

Don Kellogg 8m10s

Cool. All right. Well, thanks Roger. We'll talk to you next week. Maybe something other than Dish.

Don Kellogg 8m15s

We'll see.

Roger Entner 8m15s

Hopefully. Mhmm.

Don Kellogg 8m17s

Alright. Thanks.

Roger Entner 8m18s

Thank you. Bye bye.