Charlie Ergen's Dish Seen as One Winner of Cable Companies' Wireless Spectrum Sale

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Fellow satellite TV giant DirecTV will have to address its spectrum needs, while Ergen emerges as "wireless' power broker," says one analyst.

NEW YORK - Charlie Ergen's Dish Network is one of the winners of Friday's $3.6 billion wireless spectrum deal announced by Comcast, Time Warner Cable and a smaller cable operator with Verizon, according to analysts.
Dish shares rose 6.6 percent to close at $26.21.

Ergen previously bought spectrum, and analysts have long wondered what satellite TV giant Dish would use it for. While some have predicted Ergen could sell the spectrum or parts of it for a profit, others have said that Dish could use the spectrum to offer broadband and online video services.

Wells Fargo analyst Marci Ryvicker calculate that the cable companies will get $0.695 per megahertz per pop, a common measure of price for spectrum, in value for their so-called AWS spectrum.

"Applying this to Dish's [MSS and 700 MHz] spectrum gets us a $10 billion value, or roughly $22 in equity value, which is clearly not in Dish's stock price," she said.
BTIG analyst Walter Piecyk in a report spoke of "Ergen's emergence as wireless' power broker." He wrote: "In the future, spectrum buyers will have to negotiate a deal with the likes of Charlie Ergen and Dish Network, whose strategic value has risen dramatically."

He said that Dish paid only $0.25 per MHz per pop to buy DBSD and TerreStar spectrum.

One potential buyer of Dish's spectrum is a telecom giant whose planned acquisition of a competitor has been called in question by regulators, Piecyk said. "Dish would be a good alternative for AT&T if the T-Mobile deal is not approved," he said.

Meanwhile, Friday's Verizon spectrum deal news is also good for Comcast and TW Cable "as it answers the question 'what is the wireless strategy?' and negates the fear of a wireless build," Ryvicker said. 
Piecyk listed Dish competitor DirecTV under the deal's losers though, saying it and others will "face increased pressure to address their spectrum needs." 

Said the analyst: "DirecTV’s strategic options are declining and could continue to diminish in 2012."


Twitter: @georgszalai


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