The value of Dish’s spectrum is declining, analysts assert

As the FCC works to free up additional spectrum for commercial use—the agency just voted on rules to release 3.5 GHz and 6 GHz spectrum, and is scheduled to auction millimeter wave spectrum next month—the overall value of Dish Network’s spectrum holdings is declining, according to one Wall Street analyst firm.

“The Big-4 carriers, Frontier, and Cox are on the list for at least one of the auctions,” noted the analysts at Macquarie Capital in a recent note to investors. This raises the question: “How does Dish monetize its ~100MHz of spectrum tax-efficiently?”

Moreover, the firm noted that many of the companies that might purchase Dish’s spectrum are likely no longer interested in it. Specifically, the firm said that Verizon is now focused on obtaining more millimeter wave spectrum rather than the kind of mid-band spectrum that Dish owns, and that “it’s unlikely that Dish would be new [Verizon] CEO [Hans] Vestberg’s first big move.”

The firm added that AT&T has already made substantial purchases of FirstNet spectrum alongside its DirecTV and Time Warner acquisitions, and “cable is committed to MVNOs while tech (like Amazon) may not want the regulatory risk from network ownership.”

As a result, the firm said it will “cut our spectrum value [for Dish] by US$0.10/MHz-PoP.”

Interestingly, the Macquarie Capital analysts also outlined some of the recent prices paid for spectrum as a way to help ascertain how much Dish’s spectrum holdings might be worth:

The ultimate value of Dish’s spectrum, of course, would depend on how much a buyer wants to pay for it. Nonetheless, analysts have assessed a wide range of prices for the 95 MHz of spectrum that Dish has spent almost $20 billion accumulating. For example, in 2016 BTIG Research said that Dish’s move to get its AWS-4 spectrum designated as downlink spectrum "materially improves the usability and value of that spectrum.” And in 2017 the analysts at Jefferies said Dish Networks’ spectrum portfolio was undervalued by roughly 45%. Finally, Wall Street research firm Cowen estimated in March of this year that Dish’s spectrum now is worth some $30.2 billion.

Nonetheless, Dish hasn’t reached an agreement to sell its spectrum, and now the company appears to poised to spend up to $1 billion by 2020 to build out a nationwide NB-IoT network. Indeed, a clock counting down the days toward that goal hangs in the company’s headquarters.

But that’s just the first phase of Dish’s plan. Ultimately the company has said it may well spend up to $10 billion to access 50,000 towers in its efforts to launch a 5G network.