Dish Network is paying $100 million to delay a deadline with T-Mobile US for purchasing $3.5 billion of valuable low-band spectrum from the latter.

Dish Network, in a Securities and Exchange Commission (SEC) filing, wrote that it had come to an agreement with T-Mobile to make the $100 million payment in exchange for extending the deadline for the spectrum purchase to April 1, 2024. (Yep, April Fools' Day.) If Dish Network does decide to purchase the spectrum, the $100 million will go toward the deal’s total purchase price.

The deal involves 14 megahertz of spectrum in the 800 MHz band that T-Mobile was required to offer to Dish Network as part of T-Mobile gaining approval for its purchase of Sprint. That deal was initially valued at $3.59 billion, with Dish Network initially holding an option to back out of the purchase and pay a $72 million breakup fee.

The new agreement also allows for both parties to construct a new arrangement for the spectrum deal.

Dish Network was initially required to make a decision on that purchase at some point this summer, but wanted to negotiate an extension due to a near-term liquidity challenge.

T-Mobile US CEO Mike Sievert, during his company’s second-quarter earnings call in late July, stated that the deadline for that deal had “come and gone,” adding that “they asked for some additional time of the [Department of Justice] and we did not object to that.

“And so we have committed that we would not terminate their agreement and right to do that at any time before August 11,” Sievert added. “We’re in discussions with Dish about whether or not there might be a win-win that’s different from their initial privilege. And if there is, that would be wonderful. But obviously, that deadline is coming. But our view was it was worth taking the extra time — especially since they asked for it — in case there’s a bigger win-win to be had here.”

Dish Network Chairman Charlie Ergen, speaking during a call in mid-August touting plans to merge Dish Network with Echostar, caused some consternation with financial analysts by dismissing the belief there was a deadline to decide on the spectrum acquisition.

“We don’t think there’s a hard date at this point,” Ergen said when asked by analysts about an August 11 deadline. “I think both sides are hopefully negotiating in good faith and we’ll see where that goes. But from an investor point of view, if we’re able to construct a transaction that will be positive and it won’t affect Dish’s balance sheet.”

That positive construction is necessary for Dish Network as it works through the financial costs of deploying a nationwide 5G network.

The company has been spending billions of dollars to build out its cloud-native 5G network to meet coverage deadlines from the Federal Communications Commission (FCC) tied to the $34 billion it has spent on wireless spectrum licenses. Ergen had previously noted that the carrier’s full build could run up to $10 billion, and late last year it was forced to dip into the finance markets at a time when interest rates spiked.

“We have been skeptical from the beginning that Dish could build a highly competitive network for $10 billion, particularly considering the spending by the three major players in the wireless industry,” Gimme Credit Analyst Dave Novosel wrote in a report. “Dish has contended that costs will be lower for the buildout of a brand new network with new technology rather than upgrading an existing network. Time will tell.”

Ergen more recently said the carrier would begin to cut spending once it hit its 70% coverage requirement, which it accomplished in June. That spending lull will be a self-admitted important time for Dish Network to prove it can be a competitive wireless carrier in the market.

“We have a narrow window of opportunity here … to perform and execute and address our capital structure,” Ergen said during Dish Network’s first-quarter earnings call. “We have to do a lot of things right. We have a small margin of error but it’s all doable.”

The carrier lost 188,000 wireless customers during the second quarter of this year and witnessed its net income plunge from $523 million during Q2 of 2022 to just $200 million this year.

Ergen, who is chairman of both Dish Network and EchoStar, stated the merger between those two entities would shore up their respective financial positions. He said the deal will provide a targeted savings of $150 million per year in earnings before interest, taxes, depreciation and amortization (EBITDA).

“That will create a more robust capital structure and provide financial flexibility [and] position the company for growth and value creation,” Ergen said. That value creation will be critical for Dish Network to serve its outstanding debt, let alone its decision to purchase the spectrum from T-Mobile.

“Dish has $3 billion of debt maturing in 2024,” Gimmie Credit’s Novosel wrote in his report. “Cash on hand and the cash from EchoStar could take care of that but might leave the company with too little liquidity. The merger definitely improves the financial flexibility of Dish, but we doubt that it is sufficient.”