Dish Stock Drops On AWS Auction Results

Stock Down 4% As Satellite Company Spends $13.3B For Spectrum

Dish Network shares fell more than 4% ($3.13) per share on Friday after the government revealed it had spent significantly more than most analysts had predicted in the recently completed AWS-3 spectrum auction.

Dish shares fell as low as $67.50 (down 8.1% or $5.98 each) in earlier trading Jan. 30. The stock regained some of that ground in the afternoon and finally closed $70.35 per share, down $3.13 each or 4.3%.

Dish spent about $13.3 billion on licenses ($10.4 billion when the 25% designated entity adjustment is taken into account), behind the $18.2 billion spent by AT&T but more than the $10.4 billion spent by Verizon. Analysts had expected the satellite giant to bid between $7 billion and $10 billion on licenses.

Pivotal Research Group principal and senior media & communications analyst Jeff Wlodarczak said that although the stock was hit hard early, it rebounded somewhat on the hopes that Verizon, which received fewer licenses than some expected, may have to buy additional spectrum from Dish.

Dish shares have been on the upswing since the auction began on Nov. 13, as rising bids boosted the value of the satellite company’s existing wireless licenses. Even after today’s decline, Dish stock is still up about 10% from its price prior to the auction’s start.  

According to the Federal Communications Commission, about $44.9 billion was raised in the auction, which closed on Jan. 29 selling rights to about 65 MHz of wireless spectrum in 1,614 geographic licenses.

Dish was expected to be an aggressive bidder in the auctions, adding to its already impressive wireless holdings.

According to the FCC, some of the biggest bids by Dish’s designated bidders Northstar Wireless and SNR Wireless included about $2.9 billion for licenses in the New York City area, $1.8 billion for licenses in the Chicago area and nearly $800 million for licenses in the Los Angeles area.

In a statement, Dish congratulated the government on a successful auction, but declined further comment.

 "As part of the auction process, we publicly filed an application to participate as a potential bidder, and Dish invested in two entities that also publicly applied to participate in the auction as designated entities,” Dish said in a statement. “The auction's success is a win for the FCC, the American Taxpayer, the Public Safety community and small business. Because of the FCC's anti-collusion rules, however, we are not able to discuss further at this time."

Identified bidders have about 20 days to pay for their licenses and file the necessary forms, after which the agency opens up a public comment period, suggesting that the awards won’t be made until at least March.