Dish Network may have saved the T-Mobile/Sprint merger

Why it matters: Reducing the four major wireless carriers to three has proven a tough challenge for T-Mobile and Sprint, who seek to challenge Verizon and AT&T as a combined entity. While the new deal with Dish Network could go a long way to convince the Department of Justice that the merger is worth it, the DoJ still wants more concessions.

T-Mobile and Dish Network seem to have reached a deal that could possibly save the potential merger of T-Mobile and Sprint, per a report by CNBC.

The deal essentially gives Dish Network additional wireless spectrum and sets the satellite TV company up to be a fourth major wireless carrier in the United States. Dish Network would also have access to the joint T-Mobile/Sprint network for six to seven years. The Department of Justice (DoJ) is trying to push T-Mobile and its parent company, Deutsche Telekom, for more concessions in order to ensure proper competition post-merger with Sprint.

Additionally, the DoJ wants Dish Network to have "unlimited access" to T-Mobile's network. Unsurprisingly, T-Mobile is pushing back heavily against that concession saying that it only wants Dish to have 12.5% of the network capacity.

The report also notes that after the six to seven years of access to the joint T-Mobile/Sprint network, Dish Network would have to fall back on its own networking infrastructure. While Dish plans to build out a 5G network, it would need to secure additional capital from investors to fund the build out of the network. To that end, T-Mobile has asked potential investors not to take more than a 5% stake as to avoid Dish relying on companies with deep pockets like Microsoft or Google.

Last month, we reported that T-Mobile and Sprint may sell roughly $6 billion in wireless technology to Dish Network in order to assuage fears about competition. While FCC Chairman Ajit Pai has been supportive of the deal, the DoJ has been very apprehensive about allowing the deal to go through. It also doesn't help that 14 state attorneys general are suing to block the merger.

If this merger is to go through, T-Mobile and Sprint must be able to convince the DoJ that their combined companies would be in the public's interest and that Dish Network will be able to be a formidable competitor in the wireless landscape.