Dish Shares Surge on Spectrum Speculation

Report Says Verizon Interested in Buying Wireless Licenses

Dish Network shares rose more than 3% ($2 each) in early Friday trading after a report in the New York Post said that Verizon Wireless was in talks to purchase the satellite TV providers wires licenses.

According to the Post, Verizon has held “early, informal talks” about the spectrum. Dish Network declined comment. Verizon declined to comment on the reports, referring to CEO Lowell McAdam’s comments at the May 20 JP Morgan Global Technology Media & Telecom Conference in Boston.

McAdam denied reports at that time that Verizon was in talks to buy Dish outright, adding  that there had been no discussions between the two companies.

“Now, I think Dish has some interesting assets and there are things that a company like Verizon and Dish could do together, but I don't feel that owning a satellite company is something that I'm finding intriguing at this point,” McAdam said at the conference.

Dish shares soared as high as $62.17 each in early trading Friday, up 4% or $2.36 per share. The stock closed at $61.29 each, up 2.5% or $1.48 per share.

Analysts have valued Dish’s spectrum at about $17 billion, more than five times the $3 billion the company spent in amassing it over the past several years.

 Dish has said repeatedly that it intends to use the spectrum to build its own wireless broadband network, but would do so only with a partner. But the number of available partners in dwindling. AT&T’s pending acquisition of DirecTV would take that carrier out of the mix and Sprint, which Dish tried to buy back in 2013, is supposedly focused on a possible bid for No. 4 wireless carrier T-Mobile.

Dish could also make a bid for T-Mobile – JP Morgan media analyst Phil Cusick recently made a case for such a bid in a note to clients – which could spur Verizon to a deal. In the meantime, Dish is pressing up against a federal regulatory deadline that requires the satellite company begin building out at least 40% of its available spectrum by 2017 or lose those licenses.

Speculation regarding what Dish would do with its spectrum has been rampant ever since the company began snapping up wireless licenses back in 2011.  In his note, Cusick wrote that while a sale of the licenses or the company as a whole would bring about the greatest appreciation in the stock price, he doesn’t believe either is on the table.

“We believe that Dish looks at spectrum as an appreciating asset and is likely to buy more, and shared network builds could be an easy way to extend duration,” Cusick wrote, adding that although Dish chairman Charlie Ergen has called the standalone video business as one in decline, “We think that Dish will ultimately hold out for a partnership rather than selling the spectrum outright.”