Dish Network’s recent attempts to enter the wireless market have drawn scrutiny from a former employee, citing a conflict of interest with Dish Chairman Charlie Ergen and his interest in beleaguered license holder LightSquared.
According to the Denver Post, a Dish director resigned his position at the company following a disagreement over the company’s attempt to purchase financially strapped LightSquared. Gary Howard was on a “special committee” set up by Dish to handle a possible $2.2 billion acquisition of LightSquared, but resigned that position citing Ergen’s role. Ergen has been gobbling up LightSquared debt over the past year, which could lead to a sizeable financial return should Dish then acquire LightSquared.
Dish noted in a July Securities and Exchange Commission filing that it had formed “L-Band Acquisition L.L.C.” with the express intent to make a bid on LightSquared’s assets, which were tied up in LightSquared’s Chapter 11 bankruptcy proceedings. LightSquared has rights to a significant amount of spectrum in the 1.6 GHz band that it was looking to use to deploy a terrestrial mobile broadband network using LTE technology. However, the carrier has so far been unable to get its hands on most of those spectrum assets due to interference concerns with certain ground-based GPS systems. The company is continuing to support its satellite-based communications service.
Ergen noted last month that LightSquared was indeed of interest to the company, especially in getting control of its spectrum assets.
“It’s obviously a long-term play,” Ergen noted. “It’s obviously something that has a lot of hoops to jump through in terms of from a regulatory point of view and in terms of a technical point of view on the spectrum. So it’s challenged, and if you could take a long view with that particular spectrum in my opinion.”
Complicating the LightSquared option, however, is a lawsuit filed by Harbinger Capital Partners claiming Ergen has enacted a fraudulent scheme in attempting to acquire LightSquared’s debt and thus assume control over its operations. Harbinger, which is controlled by Philip Falcone, has recently seen its control over LightSquared diminished following a bankruptcy filing.
Despite the ongoing drama, LightSquared is reportedly moving forward with plans to auction off its assets.
Dish had previously attempted to enter the domestic wireless space through failed bids for Clearwire and Sprint, and has more recently expressed a possible interest in T-Mobile US.
“I think that opportunity – certainly, T-Mobile from a – this is a company, you could put that together with Dish in any number of ways, including an acquisition or a merger, and that’s probably not possible with the other wireless providers,” Ergen said. “But having said that, I think the other wireless providers do provide us some pretty good options. And I think in an ironic sort of way, Sprint becomes a really kind of an interesting potential partner for us as well, and I think people just assume maybe that, that’s not the case. But the fact is, we actually understand Sprint and Clearwire probably better than we do any of the other wireless providers. Certainly, I think Sprint and Clearwire understand us pretty well and certainly understand that – certainly understood the synergy and the strategic reason why we are an attractive option. I think we were just too late to the party.”
Dish currently has control over 30 megahertz of spectrum in the 2 GHz band that it was awarded by the Federal Communications Commission late last year. In addition to the spectrum holdings, Dish is also sitting on nearly $10 billion in cash and securities in which to make a move. In addition to throwing that cash at established license holders, Dish has also expressed interest in participating in the FCC’s upcoming auction of 10 megahertz of spectrum in the 2 GHz H-Block that is situated right between its licenses and those held by Sprint.
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