Spectrum Deal Helps Dish Shares

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Comcast and Time Warner Cable may make a hefty profit in their plan to sell 122 wireless communications licenses to Verizon Communications, but the agreement may have another unintended beneficiary - Dish Network.
Dish shares climbed as much as 7.6% ($1.80 each) to $26.45 per share, in early trading Friday and closed at $26.21 each, up 6.6% ($1.63).
Comcast and Time Warner Cable shares closed up 3.5% and 4.7%, respectively, on Friday, after they announced their SpectrumCo consortium (which also includes Bright House Networks) agreed to sell its wireless spectrum licenses  to Verizon for $3.6 billion. The deal represents a 64% premium to the price SpectrumCo originally paid for the licenses in 2006.
Dish Network has been on a spectrum acquisition tear in the past year, spending nearly $3 billion to acquire 40 Megahertz of wireless spectrum from two bankrupt providers. In light of SpectrumCo deal, those assets have substantially increased in value.
Wells Fargo cable and satellite analyst Marci Ryvicker said in a research note Friday that the SpectrumCo deal means that Dish's spectrum is worth about $10 billion, or $22 per share. That, she noted, is clearly not included in Dish's current trading price.
Dish has also become increasingly more attractive as an acquisition target, according to some analysts, especially in the wake of the troubled AT&T/T-Mobile deal. AT&T announced in March that it would acquire T-Mobile for $39 billion, a deal that was made mainly to combine spectrum assets. But that deal has hit several regulatory snags. In a research report Friday, Sanford Bernstein cable and satellite analyst Craig Moffett said that although the SpectrumCo deal removes Verizon from the list of potential suitors for Dish, others could step to the plate.
"Dish, for example, would now seem a more likely partner for T-Mobile, which will be even more desperately in need of spectrum if the AT&T deal crumbles, and Dish could potentially be a logical partner for AT&T as well," Moffett wrote.
ISI Group media analyst Vijay Jayant said the deal highlights the value of the Dish assets.
"There's clearly a thirst for spectrum on the part of the wireless carriers," Jayant wrote.

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