Can Dish Really Build a 5G Network for $10B?

Investors question cost of plan to become No. 4 U.S. wireless carrier
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The dust is finally settling on T-Mobile’s purchase of Sprint, at least on the federal level.

Dish Network will facilitate the deal, paying T-Mobile $5 billion to become the nation’s fourth major wireless carrier, alleviating Justice Department concerns about reduced competition.

Dish Network chairman Charlie Ergen

Dish chairman Charlie Ergen: "The $10 billion investment is still in the cards."

nvestors who are unexcitedly watching Dish switch from being a fast-eroding pay TV company into just another wireless company trying to make it in a highly competitive U.S. consumer mobile market want to know, how much will that cost?

Dish chairman Charlie Ergen has pegged the figure at around $10 billion.

“Verizon spends $15 billion annually to maintain a network that they’ve already built,” MoffettNathanson principal and senior analyst Craig Moffett wrote in a research note. “The idea that Dish might spend $10 billion (their own estimate on previous conference calls) and then somehow be finished is, well, just silly.”

Ergen is sticking to that estimate, though, and said he believes software virtualization of traditionally expensive network appliances is key.

“We still plan on building a network out and spending about $10 billion to do that,” he told investors during Dish’s second-quarter earnings call. “With the MVNO deal with T-Mobile, we’re able to extend our buildout for some of the less profitable areas longer term. So, our initial [estimate] will actually be less than we had envisioned short-term, and as a result our [operating expense] should be less than we had ultimately envisioned. But the $10 billion investment is still in the cards.”

Ergen has pointed investors to the example of Japanese e-commerce giant Rakuten, which is building what it describes as “the world’s first end-to-end fully virtualized, cloud-native mobile network,” aimed at competing against NTT DoCoMo, KIDDI and SoftBank, at a fraction of the infrastructural buildout cost.

“Rakuten is really building a 4G virtualized network, and they’ve taken it pretty far with virtualization,” Ergen said. “We will go farther.”

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