DISH Wins PCS H Block Spectrum Bid - Analyst Blog

Recently, DISH Network Corp. (DISH) has won the bid for PCS H Block wireless frequencies auctioned by the Federal Communications Commission (FCC). The frequencies can be used in all 176 markets in the U.S.  DISH has spent $1.56 billion for these wireless frequencies. This was the first wireless spectrum auction in the U.S. after 2008.

The FCC will use the proceeds to develop a nationwide wireless communication network for emergency services. Notably, DISH is the only major company filing for applications. The remaining 33 companies, which include the likes of NTELOS Holdings Corp. (NTLS), CSpire, Piedmont Rural and James Valley Cooperative Telecom, are small regional telecom operators.

DISH, the second largest satellite TV operator in the U.S., has constructed an extensive wireless/satellite spectrum base over the last seven years. The company's current spectrum holding is 56 MHzs for which it has invested around $5 billion since 2007.

In 2012, the company purchased 2 slots of the 40 MHz S-band wireless spectrum fromthe bankrupt TerreStar Networks Inc. and DBSD North America Inc. for a consideration of $2.9 billion. Moreover, the company owns a slot of 700 MHz airwaves.

Although DISH received the FCC approval to deploy a nationwide wireless network, it came with a restrictive condition. The constraint specifies that the wireless network deployment can be executed using a truncated power level.

The regulator claimed that a reduction in DISH's frequency level is required to avoid interference with an adjacent PCS H Block frequency which it recently auctioned. The newly acquired radio spectrums will significantly raise DISH's power and emission levels to establish a profitable venture in the wireless market.

We believe DISH's attempt to enter into the wireless market is a diversification strategy to counter pay-TV market saturation. 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.

In 2013, DISH lost to Softbank of Japan in its attempt to acquire Sprint Corp. (S). There were rumors in the industry circle that DISH may opt for T-Mobile US Inc. (TMUS) in the first half of 2014. However, DISH recently declared that it will not outbid Softbank in its effort to acquire T-Mobile US also. DISH currently has a Zacks Rank #3 (Hold).