Dish’s ‘undervalued’ spectrum assets worth $30.2B

Dish Network is sitting on a treasure trove of underappreciated spectrum assets that will become increasingly attractive to carriers, according to a report from Wall Street research firm Cowen. Indeed, Dish's spectrum portfolio makes it a “supermarket of spectrum” for existing carriers, the firm wrote.

Dish has spent roughly $20 billion over the past decade to amass a significant spectrum portfolio, and has roughly 95 MHz of low-band and mid-band spectrum per market. Cowen estimates that spectrum now is worth some $30.2 billion.

Dish’s assets include its Band 66 spectrum (which combines the company's AWS-4 holdings with its AWS-1 and AWS-3 holdings)spectrum that Cowen claims is the most valuable, “providing a carrier the convenience, familiarity, device ecosystem (similar to AWS-1), instant operability (very little infrastructure as it’s largely a software update), and a large boost in capacity in an ideal wavelength,” the firm said. “Dish’s low-band spectrum is of lesser value but could be ideal for a new carrier looking to enter the market with instant coverage.”

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As 5G networks are built out, carriers will likely be looking for more spectral capacity to meet the growing demands consumers make on mobile networks, and Dish’s portfolio could position the company to reap rewards from its spectrum assets.

“Low-band and mid-band spectrum is still the lifeblood of wireless networks,” the Cowen analysts wrote. “Exclusive rights to mobile airwaves are necessary, depleting, in finite supply, and with limited cost-efficient alternatives.”

Dish’s plans for its spectrum have been the topic of much interest over the years. The company is well-positioned to sell off or license its spectrum to other carriers, but it could also build out its own wireless business. Dish's Charlie Ergen stepped down as CEO in December 2017 in order to oversee Dish's mobile business. The move was followed by an announcement in February that the company will spend up to $1 billion to build out an NB-IoT wireless network through 2020.

But the Cowen analysts believe Dish’s NB-IoT plans are a placeholder, designed to satisfy the FCC's spectrum buildout requirements for a relatively low price while the company continues to "age" its spectrum for increased monetization opportunities in the future. Dish is required by the FCC to use its spectrum assets by 2020 in order to keep ownership of the spectrum.

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Carriers will “eventually need Dish's spectral capacity, delivering stock appreciation for the patient investor,” the Cowen note said. “The current market valuation for Dish shares (and our valuation) implies a far higher spectrum value that we believe will instead be largely deployed for the more lucrative consumer mobility (5G) market.”

“Whether Dish sells itself, sells the spectrum, leases the spectrum, or forms a creative build/lease partnership remains to be seen,” the firm said. “What we know is that spectrum value will only increase as carriers keep up with capacity demand.”