DISH Network Corp. (DISH) is skeptical on its decision to deploy a wireless network and intends to sell the available spectrum if it fails to find a suitable wireless partner, despite gaining the much-awaited FCC approval.
Earlier in 2011, DISH bought two satellite-based wireless services providers DBSD North America Inc. and TerreStar Networks Inc. for a total consideration of nearly $3 billion. The acquisitions are expected to give the company accessibility to 40 Mhz of satellite spectrum.
Delay in receiving FCC nod has resulted in significant loss of market share for DISH Network as low cost video streaming companies like Netflix, Inc. (NFLX) and Hulu are continuously attracting customers. Moreover, top telecom carriers like Verizon Communication Inc. (VZ) and AT&T, Inc. (T) with the FiOS and U-Verse fiber optic cable service (offering Video, voice and data) have gained huge subscribers.
In an effort to reduce its customer churn as well as to create another revenue stream, DISH Network has proposed to set up its own wireless network service, thereby allowing the company to offer triple play services to its customers whether at home or away.
On the flip side, DISH Network’s plan to set up wireless network without any wireless partner will be an extremely difficult task as it requires huge investment and marketing support. Moreover, when telecom companies’ battle for spectrum crunch, 40 Mhz of spectrum will not be enough for the company to establish strong foothold in the U.S.
In order to realize its goal of achieving solid market traction in the wireless market, at present DISH Network is bidding for Clearwire Corporation’s 2.5 Ghz spectrum portfolio. There are basically two factors, which are driving the company to bid for Clearwire. Firstly, its high frequency spectrum will be very useful to deliver huge data mainly comprised of HD videos. Secondly, it will get cellphone towers and other infrastructural support from Clearwire, hence saving useful time for the company.
Therefore, we believe that if DISH Network is successful to acquire Clearwire it will make the company a much dominant force in the wireless industry.
Currently, DISH Network carries a Zacks Rank #3 (Hold).
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