Dish Seen Weighing Fewer Spectrum Options Post-Sprint Nextel Bid
With the bids for Sprint and Clearwire off the table and an offer for LightSquared spectrum, Dish Network still has options for how it will use its AWS-4 spectrum and expand its services for customers, analysts said. Dish’s $2.2 billion offer for LightSquared could help Dish, but only in the long term, some analysts said.
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Dish’s options appear to be dwindling, said Jeff Silva, an analyst at Medley Global Advisors, but it “constitutes a key player in the wireless space on the basis of spectrum alone.” Dish has to be taken seriously because it holds a valuable resource in a spectrum-scarce environment, and in an industry where data demand is surging, he said: “You either have spectrum or you don’t. … You can’t substitute anything."
Dish needs to update and offer more services to more customers, said Jeff Kagan, an independent technology industry analyst. “It can mean using the spectrum to help other industries go wireless and help transform what they're doing.” Dish wants to acquire more spectrum instead of selling it, he said: “I don’t think they want to get out of the business.” Dish Chairman Charlie Ergen is a “creative opportunist,” Kagan added. “He can market the spectrum in a variety of different ways."
The DBS company made a $2.2 billion bid for LightSquared spectrum last week, but some analysts said it will take a long time to use that spectrum. It’s not a direct alternative to buying Clearwire spectrum, said Tim Farrar, independent MSS analyst. Clearwire spectrum is “immediately usable,” he said. LightSquared spectrum will take time to work out and it will be difficult to develop an ecosystem around it, he said: “It’s not going to be allocated in the same way in other parts of the world.” Any usable spectrum is valuable because it’s a limited resource, said Silva, but “then it becomes a matter of how it can be monetized once it’s acquired.”
A deal with a wireless carrier may be Dish’s best option, Silva said. A play for T-Mobile will most likely be the fastest way to take care of a lot of the issues around monetizing, he said. But “that may not be in T-Mobile’s strategic plans,” he said. Dish could combine its spectrum with T-Mobile “which already has a nationwide footprint,” he said. The wireless industry is mature and saturated in terms of subscribers, he said: “There’s just no room for a new entrant.” T-Mobile is probably the only wireless carrier left to do business with Dish, Silva said: A deal with Verizon or AT&T would be difficult “with the FCC possibly rebalancing the spectrum screen.”
Owning LightSquared doesn’t put Ergen in a better position to buy T-Mobile or any other company, Farrar said. “It’s another option for the long-term, but it’s not really advancing his plans to get into the wireless business.” It’s probably “a backup option if he can’t take his wireless plans forward in the next couple of years,” he said.
A merger with DirecTV could still be on the table, Farrar said. Offering to do a large-scale fixed wireless broadband deployment “would probably be a critical component of the offer to the FCC to try and get the deal approved,” Farrar said: Dish would provide fixed broadband competition in suburban and rural areas, “which would be a big win for the FCC.”