Flooded with access to new spectrum assets, Dish Network has yet again thrust itself into the middle of the mobile telecom space even though it continues to sit out actually competing in the market.
Speaking with investors in a conference call connected with the release of its latest quarterly results, Dish Network Co-founder and Chairman Charlie Ergen explained that the company had a number of options in terms of what it can do with its bolstered spectrum portfolio.
Those options could soon come to light as the lines of communication that had been shut off due to the auction process can now be re-opened. Those lines seem ready to be filled as both T-Mobile US and AT&T have expressed interest in at least talking with Dish about a possible spectrum deal, even though they were not pleased with how Dish managed to get its hands on the latest batch of assets.
AT&T recently noted that Dish Network was sitting on an average of 81 megahertz of spectrum across the nation’s top 100 markets, with most of that in so-called midband locations. Dish has reportedly been in talks for years with established operators about setting up a network partnership in order to use its spectrum holdings running across already deployed networks, but has yet to strike a deal.
Ergen, who is also set to reassume the CEO and president positions at Dish, said the company remained open to potential deals for all of its spectrum holdings, as well as with potential deals with companies both inside and outside the traditional mobile telecom space.
“We will entertain those things that are good for our shareholders,” Ergen said. “This isn’t something we have predetermined … that we are going to do before we have a conversation with people. There are people both in industry and outside of industry that are interested in this industry and particularly the spectrum and I think there will be a lot of conversations over the next few months.”
Ergen did make sure to say that Dish Network does continue to look for ways to enter the market. That may be important at least from a regulatory perspective as the government has typically frowned on companies snatching up spectrum assets in auctions in order to then flip those assets to established players.
“But structurally we will look at every structure that make sense for the company,” Ergen explained. “If you ultimately made a decision that you are going to sell the spectrum or you thought there was a likelihood that you might highlight because you might do, you might have a different structure, you might structure your company differently. But we haven’t – again that is not a decision we made yet.”
Doing what’s right for Dish means doing what’s right for its shareholders, with some concern shown over how the company is going to manage the $10 billion it will now need to supply to its designated entity bidding partners in order to get their hands on the latest chunk of spectrum. Dish Network CFO Steve Swan noted that Dish could also tap capital markets if it needed access to additional funds. That path would seem to be open to the telecom space as Sprint recently managed to snare $1.5 billion in new funding.
Another pressure point for Dish Network is the build-out requirements tied to its spectrum holdings. The AWS-3 spectrum that was part of the latest auction, calls for licensees to cover 40% of a license’s potential customer base within six years of receiving the license and 75% coverage by the end of the 12-year initial license term. Ergen noted that the penalty for missing a milestone was a 1-year reduction in the term of the license, which did not seem to faze Dish Network’s leadership.
Of greater concern to Ergen was the standards process tied to establishing interoperability and band plans for the newly introduced AWS bands, with Ergen noting that he expected a fight from established operators in terms of getting those requirements nailed down.
Despite the hurdles, Ergen remained optimistic that progress will be made.
“So those are all things that we have to get done. And [we] will certainly have more information for the street and for every analyst as we move forward,” he said. “But obviously we are in a good position strategically at this point.”
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