Dish not interested in selling Boost, at least for now

Dish Network’s Boost Mobile business isn’t doing well. The company lost another 210,000 retail wireless net subscribers in the second quarter, and while it also has customers under other brands that it acquired, Boost is the biggest brand of the bunch.

So why not just sell the Boost business and be done with it? The question came up during Dish’s quarterly conference call on Wednesday.

Through an elaborate and rather unique deal hammered out with the federal government as part of the 2020 T-Mobile/Sprint merger, Dish was set up to be a service provider using Sprint’s Boost prepaid service and an MVNO arrangement with T-Mobile. (AT&T has since been added as an MVNO partner.)

Now that Dish has launched its own 5G network – albeit in the early stages – it’s presumably not required to keep Boost – although that's not a certainty. 

Dish co-founder and Chairman Charlie Ergen acknowledged that owning Boost is not a necessity. After all, the real value of Dish is in its own 5G network, he said in answer to a question from LightShed Partners analyst Walter Piecyk.

“We’ve said that we’re in the wholesale business, so our capacity can be sold to others in the industry, so we’re not trying to monopolize our network,” he said. “I guess the answer is it’s not a necessity but today we prefer that it belongs with us.”

Stephen Stokols, the executive in charge of Dish's retail wireless business, spoke of the more aggressive expansion into postpaid that Dish has planned for later this year with the Boost Infinite brand.

“It’s an opportunity to come in fresh and do things in a slightly different way and a more aggressive way,” he said. “It’s on our own platform, so unlike what we’ve been doing with Boost… we are now operating on our own platform,” which allows for a far more aggressive and competitive offering.

More on the Boost Infinite offer will be coming out later in the year, he said.

Prepaid vs. postpaid 

Ergen said financial analysts, correctly so, always put a bigger value on postpaid than prepaid. There are a number of reasons for that, including that there’s much higher churn in prepaid. “It’s materially different in terms of the economics,” he said.  

He also reiterated how it’s a bit of a head scratcher that the industry gives somebody without credit a much better deal on wireless phone service than somebody with credit. “We’re probably the only country in the world” where prepaid is actually less expensive than postpaid, he said.

In a wide-ranging report for investors after Dish’s call on Wednesday, New Street Research analyst Jonathan Chaplin noted that the question about a Boost sale is the first time he remembers it coming up on a quarterly conference call like this.

He said it’s a potential source of funding that’s often overlooked, although he also mentioned that the Boost business is more profitable than many people realize.

“If they did need a creative source of funding, and if we assume EBITDA is ~$0.6BN on the 8MM customers they have today, it could be worth at least $2.5-3BN. This could plug the bulk of the funding gap” though it would also remove a source of free cash flow, he said.