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Combination of Dish and EchoStar receives FCC approval

Several divisions of the FCC have signed off on the merger of Dish Network and EchoStar, seeming to pave the way for the transaction to close before the end of this year.

The FCC’s Office of Engineering and Technology, the Space Bureau and the Wireless Telecommunications Bureau granted the requisite license transfers for the companies. In a public notice, the FCC said granting the applications will serve the public interest.

Dish and EchoStar announced a merger agreement on August 8, in what’s essentially a recombination of the companies, which split in 2008. They amended the agreement on October 2, with Dish becoming a wholly owned subsidiary of EchoStar once all the regulatory approvals are ascertained.

Investors have been worried about the deal closing mostly because it’s essential to Dish’s near-term funding and investors have been focused on what might go wrong, according to a research note published today by New Street Research’s Jonathan Chaplin.

The FCC’s approval “removes the biggest hurdle to closing; perhaps the only hurdle,” he wrote. “Closing the deal will remove the biggest hurdle to Dish being funded through 2024. The next hurdle they need to clear will be when $2BN matures in December 2025. Dish has almost two years to figure things out.”

Based on New Street estimates, Dish needs to raise a little under $1 billion to get through the 2025 maturities, and they’ve analyzed how Dish can sell some non-strategic assets to get them there.

Analysts at MoffettNathanson painted a much more dire picture for Dish after it announced dismal third-quarter results. The cash on EchoStar’s balance sheet is little more than a drop in the bucket, as well as the cash it gets through the sale of its business in Puerto Rico, they said.

For years, they’ve pointed to bankruptcy as the probable end game for Dish, and analyst Craig Moffett said that outcome seems much more imminent given Q3 losses.

Meanwhile, Dish wants to buy some 800 MHz spectrum from T-Mobile but needs a way to finance the full $3.59 billion purchase price. Divesting the spectrum was a condition of T-Mobile’s merger with Sprint.

At a UBS event this week, T-Mobile CEO Mike Sievert said Dish already sent T-Mobile a non-refundable $100 million deposit and if they fail to close on it, T-Mobile is authorized by the Department of Justice to conduct an auction of that spectrum.

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