Harbinger Files Suit against DISH - Analyst Blog

Harbinger Capital Partners, the principal owner of currently bankrupt 4G wireless wholesaler LightSquared Inc., has filed litigation against satellite TV operator DISH Network Corp. (DISH) in the U.S. Bankruptcy Court in Manhattan. Harbinger has requested the court to reject DISH's bid to acquire the wireless spectrum of LightSquared. DISH currently has a Zacks Rank #3 (Hold).

In May 2013, DISH offered $2.22 billion to acquire 40 MHz of wireless spectrum held by LightSquared. Recently, the U.S. Bankruptcy Court in Manhattan has allowed LightSquared Inc. to send a standalone bankruptcy plan to creditors for vote. This bankruptcy exit plan has been supported by Fortress Investment Group LLC., JPMorgan Chase & Co. and Melody Capital Advisors LLC.

Notably, LightSquared's plan is contingent upon obtaining certain regulatory approvals while DISH simply needs to state how it will utilize the LightSquared's airwave. Harbinger rejected DISH's bid stating that DISH has resorted to fraudulent means to enter the bidding process. Both DISH and EchoStar Corp. (SATS), controlled by Charlie Ergen, are major competitors of LightSquared.

In Oct 2013, a Manhattan bankruptcy judge approved DISH's bid and had set an auction date on Nov 25, 2013. Earlier, the Federal Communications Commission (FCC) had refused the use of this particular airwave as it was interfering with the global positioning system. This led to LightSquared's bankruptcy.

Later on, the FCC conducted more tests on the spectrum and eventually permitted an auction with a few modifications. DISH will present its plan for airwave at the next court hearing on Jan 10, 2014.

Meanwhile, in the last couple of years, DISH has constructed an extensive wireless/satellite spectrum base. On Jun 17, 2013, DISH and NTELOS Holdings Corp. (NTLS) jointly started providing fixed-mobile broadband network to offer high-speed Internet service to areas served by NTELOS. This joint venture will reach other parts of the U.S. in early 2014.

On Dec 17, 2013, DISH together with Sprint Corp. (S) announced that the two companies have decided to jointly develop and deploy a fixed broadband network in Corpus Christi, Texas. The network is expected to start from mid-2014 on a trial basis. If successful, then the two entities may extend the broadband network to other areas.