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Side Effect

19 June 2019 by jbchevrel

DISH DBS Corp (DISH) was the worst performing name in US HY space today, wider by c50bp on the 5y contract, now close to c500bp. This is as reports came yesterday post London close that DISH is actually in talks to pay at least $6B for assets that T-Mobile US Inc. (TMUS) and Sprint Corp. (S) are unloading to get the regulatory approval for their merger. In the same time, TMUS is about unchanged and S is 13bp tighter on the 5y. What is at stake is that the US wants to at least 4 wireless competitors, to avoid anti-competition... Cash-wise, DISH‘s bonds are also among the worst performers in US HY. Indeed, the $2B 5.875% 24s are down ~65c and the $2B 7.75% 26s lost about 1.25 point. As a second-order effect, Bloomberg intelligence wrote in a note that if the Department of Justice requires spectrum asset sales to Dish as part of the T-Mobile-Sprint approval, it would decrease the chances of the FCC denying DISH a renewal of its expiring wireless licenses in 2020. DISH still must meet the buildout requirements for use of that spectrum, which are license-specific and small. If DISH does so and appears to be moving to a more robust 5G network, BI analysts doubt the FCC will deny the renewal of the licenses, even though it has legal flexibility to do so and an incentive to act like it will. The FCC may hesitate to cripple what the DOJ views as a critical fourth competitor.