Yesterday, DISH Network Corp. (DISH) announced that the company will participate in the upcoming low-frequency wireless spectrum auction to be conducted by the U.S. Federal Communications Commission (FCC). The auction is expected to take place in mid-2015. This sale will offer airwaves voluntarily freed up by several TV stations in the U.S. The money that will be raised from this auction will be given to the TV station owners.
On the other hand, lowband spectrum winners will get hold of the much coveted frequencies to expansion or deployment of a new mobile broadband network. The auction will also help the U.S. government to solve the country’s spectrum crunch to some extent.
The U.S. government is striving to provide more airwaves to support the growing demand for smatphones, tablets and other mobile handheld devices. DISH has further decided to take part in the smaller AWS-3 spectrum auction to be conducted by the FCC on Nov. 13, 2014.
DISH, the second largest satellite TV operator in the U.S., has built an extensive wireless/satellite spectrum base over the last seven years. The company’s current spectrum holding stands at 56 MHzs for which it has invested around $5-$6 billion since 2007.
In 2012, the company purchased 2 slots of the 40 MHz S-band wireless spectrum from bankrupt TerreStar Networks Inc. and DBSD North America Inc. In Mar 204, DISH won the bid for PCS H Block wireless frequencies auctioned by the FCC. Moreover, the company owns a slot of 700 MHz airwaves.
The triple-play pay-TV, high-speed broadband and telephony market in the U.S. is currently undergoing massive consolidation. Two major pay-TV operators, namely, Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC) have decided to merge. AT&T Inc. (T) is pursuing the acquisition of DISH’s closest competitor, DIRECTV.
Both the deals are awaiting regulatory approval. Notably, DISH has raised objection against both these mergers to FCC as the deals will be detrimental to the competitiveness of the pay-TV industry.
We believe DISH’s attempt to enter the wireless market is a diversification strategy to counter pay-TV market competition. DISH enjoys the opportunity to collaborate with established telecom or tech companies to jointly establish a wireless network or monetize its spectrum holding for considerable profits.
Importantly, several industry analysts estimated that the existing wireless spectrum portfolio of DISH will be valued at around $25-$26 billion. DISH currently carries a Zacks Rank #3 (Hold).
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