DISH Network Corp (DISH) Spectrum Becoming More Valuable Than Core Business


DISH Network Corp (NASDAQ:DISH) stock has been on an impressive rally over the past few trading days as action in the AWS-3 auction heats up with bids reportedly exceeding $34 billion. The early results of the ongoing government auction of wireless spectrum have turned out much stronger, than expected.

Spectrum Valuation Offsetting Core Business Decline

DISH Network Corp (NASDAQ:DISH), just like AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) remains focused on the chase for more spectrum as it will help in offering faster and extensive coverage as customers continue to yearn for more data but it has acted aggressively with the knowledge the higher the auction goes the higher the value of its existing specturm.

The valuation of the company’s spectrum is expected to offset declines in sentiments due to 1.5% decline in the company’s earnings for the current fiscal year.

DISH Network Corp (NASDAQ:DISH) spectrum remains the most attractive feature as some analysts believe the business could be worth $18.6 billion on an after-tax basis. Wells Fargo analyst, Marci Ryvicker expects spectrum prices to continue rising in the coming weeks much to the excitement of Dish.

Analysts Bullish on Spectrum Value

The analyst remains bullish that with the ongoing rally in prices, Dish’s spectrum could be more worth than the current $54 a share price estimate and should account for the majority of the company’s share price of $74 a share.

In recent conference call, Leon Cooperman shed light on his perspective of the value of the spectrum

In a recent conference call, Leon G. Cooperman of Omega Advisors, Inc asked a pointed question to Charlie Ergen suggesting the spectrum could be worth more; than, the entire market value of the company.

“Well, I may be off my rocker, but I think the spectrum you have could be worth as much as the entire market value of the company presently.”

Ergen punted, but did not dismiss it and we are seeing why now.

DISH does not want to sell, but open to possible options

DISH Network Corp (NASDAQ:DISH)’s Charles W. Ergen, Co-Founder and Chairman in Q2’14 conference call has categorically stated that his company would not like to sell raw spectrum nor it would like to go alone. However, if there is not realistic business opportunity then the company is open to all possible options.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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