Dish Network’s closure of Sprint’s prepaid wireless business, including Boost Mobile, is set to occur on July 1, according to Securities and Exchange Commission (SEC) filings.
The closure has been the subject of much speculation as many expected the deal to close on June 1. When that didn’t happen, analysts questioned what was holding it up and whether it would close as originally structured.
Both Dish and T-Mobile submitted filings with the SEC on Wednesday addressing the closure of their Asset Purchase Agreement (APA).
T-Mobile’s merger with Sprint closed on April 1, which is the same day the government’s consent decree was filed, giving the companies 90 days to finalize a deal. The Boost deal was widely expected to close by June 1; the delay appeared to hinge on Dish’s ability to provision Boost handsets onto the T-Mobile network, something Dish Chairman Charlie Ergen alluded to during the company’s first-quarter earnings call.
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FOX Business’ Charlie Gasparino reported last week that the U.S. Department of Justice (DoJ) was mediating the deal. On Wednesday, he reported that the Justice Department was brought in after Ergen was looking for last-minute concessions.
According to a T-Mobile SEC filing (PDF), the DoJ on June 17 “determined that T-Mobile has complied with the requirement in the final judgment entered by a federal district court in Washington, D.C. on April 1, 2020 (the ‘Final Judgment’) to provide DISH the ability to cross-provision any new or existing customer of the prepaid business with a compatible handset onto the T-Mobile network. As a result, we believe all conditions to closing under the Asset Purchase Agreement (other than those conditions that can only be satisfied at closing) have been satisfied and, subject to the satisfaction of the conditions that must be satisfied at closing, the closing of the Prepaid Business Sale will occur on July 1, 2020.”
T-Mobile’s SEC filing was signed by CFO Braxton Carter, whose retirement was announced on the same day. Carter, who came to T-Mobile in 2013 by way of the MetroPCS acquisition, will be replaced by Peter Osvaldik, T-Mobile’s current senior vice president of Finance and chief accounting officer, effective July 1.
RELATED: Braxton Carter retires as T-Mobile’s CFO
The Boost acquisition will give Dish an immediate wireless retail presence. The government’s remedy in approving the T-Mobile/Sprint merger included T-Mobile divesting the prepaid assets to Dish, as well as a seven-year MVNO deal. Dish can then use the T-Mobile network—a better one than Sprint’s—while it builds out a 5G standalone network to compete as a fourth facilities-based carrier to replace Sprint.
Dish’s asset acquisitions from Sprint were valued at about $5 billion, including a $1.4 billion purchase of Sprint’s prepaid business and a $3.6 billion agreement to buy Sprint’s nationwide 800 MHz spectrum.
Dish is supposed to deploy a nationwide 5G broadband network covering at least 70% of the U.S. population by June 14, 2023. If it fails to meet its 5G deployment deadlines, it will need to pay up to $2.2 billion to the U.S. Treasury.
At the time the deal was announced last summer, Sprint’s prepaid business, primarily the Boost brand, served about 9.3 million customers, had more than 400 employees and a nationwide independent retail network supporting more than 7,500 retail outlets.
RELATED: Boost inventory suffers from Dish/T-Mobile rift—reports
It’s not yet clear how the COVID-19 pandemic affected prepaid sales, although handset inventory at Boost has been constrained, and that was not blamed on the health crisis, according to Wave7 Research. The lower inventory was tied to T-Mobile not wanting to order more phones for a business from which it wouldn’t reap any returns in the months ahead from subsidized handsets.
T-Mobile’s Q2
T-Mobile also revealed in a SEC filing that it expects second-quarter postpaid net customer additions will be between 800,000 and 900,000, primarily driven by higher postpaid “other” net additions. It previously said it was expecting between zero and 150,000 net additions for the quarter and explained that the new estimates reflect a faster recovery in retail as well as new opportunities in T-Mobile for Business.