Dish Network Corp. is in preliminary discussions on a complex deal to merge its Boost mobile-phone business with Chairman Charlie Ergen’s blank-check company.
(Bloomberg) — Dish Network Corp. is in preliminary discussions on a complex deal to merge its Boost mobile-phone business with Chairman Charlie Ergen’s blank-check company.
Ergen’s Conx Corp., which went public in 2020, is seeking an extension from shareholders to complete a business transaction so it can keep pursuing the talks, according to a statement released Wednesday. A vote on an extension will take place on Oct. 31.
“We are in regular dialog with interested parties who may assist us in accomplishing our goals, including recently preliminary conversations with Conx,” Dish said in a separate emailed statement. “There can be no assurance that these preliminary discussions will lead to a transaction nor as to the structure or terms of any such transaction.”
A transaction between Ergen’s companies would add a new level of intrigue to the billionaire’s high-stakes plan to build his own mobile-phone network. Ergen acquired prepaid service Boost from T-Mobile US Inc. in 2020 as part of an arrangement with the US government, which sought to preserve competition in the wireless market while allowing T-Mobile to merge with Sprint Corp. Boost has been rolling out 5G services in 120 cities, using airwaves Dish has acquired over the years, so it can stop relying on leased capacity from other carriers’ networks.
If realized, the merger would give Boost money to accelerate its development without tapping too much of Dish’s funds, New Street Research analyst Jonathan Chaplin wrote in a note to clients Thursday.
On an earnings call in August before the Conx proposal, Ergen pointed to the advantages Boost would get as it moved from being a low-margin, prepaid business to attracting a more lucrative and loyal monthly subscriber, which is “materially different in terms of economics.”
Later in the call addressing a question on whether Dish needed to own the retail wireless business as it pursued a 5G network buildout, Ergen said a separation of Boost was an option. “There’s a lot of synergies and owning that, but the real value of our company is our network,” Ergen said. “We’re in the wholesale business, so our capacity can be sold to others in the industry.”
Ergen concluded his answer about owning Boost by saying: “We’d prefer that it belongs with us.” If the Conx move is successful, Ergen could be able to keep it in the Dish family.
Conx raised $750 million during the heyday of special purpose acquisition companies, or SPACs, saying it would pursue a deal with a company in the telecom, media or technology space. SPACs offer partners a way to go public and secure funding without the traditional hurdles of an IPO.
Chaplin, the New Street analyst, gives the deal 50/50 odds at success. He cites several hurdles ahead, including the need for approvals from the SPAC’s investors, Dish’s board and the US Justice Department. Conx will also likely need to raise additional money from institutional investors.
Shares of Dish, based in Englewood, Colorado, rose less than 1% to $13.33 as of 12:05 p.m. Thursday. Conx, based in Littleton, Colorado, was little changed.
(Updates with analyst’s comments beginning in fifth paragraph.)
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