I considered the spectrum value.. a few days ago I mentioned in a post here that Morgan Stanley's bullish case is an extra $9 per share on top of their $35 target. I conceded then that spectrum value could also be driving the stock's recent meteoric rise, as institutional guys with access to the FCC front run public disclosure. Really high trading volumes since last week support such a thesis.
This was one reason for my considering jumping into a long bet, but unclear to me is the timing of the spectrum's monetization. The FCC gives a green light for terrestrial use, and then what? DISH, via a partnering agreement or solo, will then try to go head-to-head with T, VZ, and S? Complete black hole for CapEx... Or DISH then sells all or some of the spectrum? If you know a likely buyer that has strategic rationale for buying, please share. Thanks.
First they need the FCC approval, second and the billion dollar question is what they do with it. And that depends on what conditions the FCC puts on the build out. The spectrum is at the 1.8mghz level, and is a whopping 45mghz of clean spectrum, aka: it's good spectrum and they have a lot of it. If the FCC Approves it the values goes from roughly $9/share to about $25/share on the spectrum alone. That is taking what previous sales in the past have gone for. Wells Fargo has the best analysis on this. The spectrum fits AT&T like a glove, but Ergen is playing hard ball. Who he partners with, and does he sell it is anyones guess, but it's a huge bargaining chip and he's going to use it to get the best deal possible. Also DTV wants to buy Dish, they have said it on more than one occasion. They don't own spectrum, so in order to get this merger through the FCC Dish and DTV could argue that they need to merge in order to compete with the big boys on wireless broadband. Very reasonable argument.