That’s seems to be the question Charlie Ergen is asking Verizon, with the leak of merger talks between DISH and T-Mobile to the Wall St Journal. Yesterday DISH held an analyst meeting at which nothing much of consequence was said, raising the question of precisely why DISH held that analyst meeting in the first place.
The logical conclusion is that DISH hoped it would be able to announce some sort of deal yesterday, but that wasn’t achieved, and so now there has been a decision to leak more specific details about the progress of the DISH/T-Mobile talks (which have been rumored for months). The details disclosed make it unlikely that the intent is to bring T-Mobile back to the table, given the statement that talks on valuation remain at a “formative stage”. If the leak came from the T-Mobile side then its plausible to imagine that the aim is to pressure a cable company to make a bid for T-Mobile, or simply that the WSJ made a mountain out of a molehill, given others are saying there has been no change in the situation in recent weeks.
However, (until now) I considered it more likely that DISH is sending a message to Verizon, after the breakdown of talks on a spectrum sale or leasing deal, that Ergen has other alternatives he can pursue. Its previously been reported that Verizon rejected DISH’s asking price of $1.50 per MHzPOP for the AWS-4 spectrum last summer, and even after the AWS-3 auction, I very much doubt Verizon has shifted its position on valuation significantly. For spectrum without an ecosystem like AWS-4, I would still not expect Verizon to be willing to pay much more than $1 per MHzPOP.
Nevertheless, if Verizon had been willing to commit to a partial lease of DISH’s AWS-4 spectrum and support interoperability into the bargain (perhaps with some AWS-3 licenses included to raise the average reported price), then that would have helped DISH to undertake a spectrum spinoff. By doing a deal now, I would expect DISH to also have been able to seek a compromise with the FCC by agreeing to repay the $3.3B DE discount it received in the AWS-3 auction, and thereby mitigate the bad feeling which would otherwise be likely to hamstring DISH’s ability to get help from the FCC in ensuring AWS-3/4 interoperability in the future.
So if Verizon has truly walked away for good, and cannot be forced back to the table by this leak, then I think this is unalloyed bad news for DISH. Without interoperability it is hard to see the value of DISH’s AWS-3 spectrum for T-Mobile, as I noted last week. And it is equally hard to see how agreement can be reached with Deutsche Telekom on the respective valuations of DISH and T-Mobile, especially when DT can hold out for a potential merger with a cable company in the future. So I think Verizon can still proclaim that when it comes to DISH’s spectrum, it’s heads we win, tails you lose.