Thursday, February 12, 2015

Does Spectrum Now Represent 80% of Dish Network Value?

The U.S. mobile business remains as unstable as ever in the wake of the recent AWS-3 spectrum auctions, which saw Dish Network acquire another $13 billion worth of spectrum assets.

In fact, some might attribute almost the entire value of Dish Network to its spectrum holdings. Conservatively, some might estimate the spectrum holdings at 56 percent of total value. Others might peg the spectrum as high as 80 percent of total value.

If the value of Dish spectrum now is about $72 billion, and the value of the video subscription business is $18 billion, then spectrum potentially represents 80 percent of total value.

Others might conservatively estimate the value of Dish Network spectrum at $36 billion, if it can be put to use in an active mobile network. Otherwise, Dish Network loses the right to use the spectrum, and its value dips close to zero, in the absence of any buyers.

Others might argue that the value of Dish Network spectrum potentially exceeds the present value of Sprint or T-Mobile US, even if Dish has no network and no customers.

But Dish Network faces perilous choices. If it cannot show 40 percent of its owned spectrum actually is active, supporting a retail network and service, by 2017, Dish loses the right to use the spectrum.

So what Dish Network does is among the biggest questions about the U.S. mobile market.

Dish Network at one point in 2013 was regarded as a legitimate bidder for Sprint, or at least significant Sprint spectrum, even if SoftBank eventually bought T-Mobile US.

Some have speculated that T-Mobile US might also have been SoftBank’s target, instead of Sprint, under some circumstances.

Illiad, the French telecom concern, actually did try and buy T-Mobile US in 2014.

Many believe Dish Network might make a bid for T-Mobile US, eventually. That is among the best options if Dish Network really believes its future survival depends on it becoming a mobile service provider.

Was a roll-up of assets--a combination of Sprint and T-Mobile US--always part of the strategic plan when SoftBank decided to buy Sprint, or was that an opportunistic development only after the strategy had been implemented?

That isn’t clear, from the outside looking in. What is clear is that the strategic terrain around Sprint and T-Mobile US continues to be volatile and unstable.

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