Analyst analyzes buying spree at Dish


Dish Network has been busy on the acquisition front lately. It paid $1.38 billion for TerreStar Networks after shelling out $1.4 billion for DBSD and $320 million for Blockbuster. What is the grand plan? Wells Fargo Securities analyst Marci Ryvicker has been trying to map it out.

Here’s what Ryvicker had to say in a summary of a longer research report sent to clients:

* “On 8/22, DISH filed its request for the transfer of Terrestar licenses with the FCC. After reading the 80-plus page document, it is clear that DISH plans to launch a hybrid satellite and terrestrial mobile and fixed broadband network using the contiguous 40MHz of 2GHz Mobile-Satellite Service spectrum across its retail customer base. However, three key factors remain uncertain and could weigh on the stock in the near term: 1) timing, 2) the amount of capital DISH will commit; and 3) whether DISH will pursue this path alone or with a third party. In this note, we summarize what we thought were the most important parts of yesterday’s (8/22) FCC filing. One caveat – given that this filing was released late afternoon, we did not have time to consult spectrum experts or our FCC contacts – so this is our “first look” so to speak.

* For now, DISH intends to use both Blockbuster and the 700MHz spectrum in this grand plan. While we still don’t know the specifics (no surprise here), the filing does mention both Blockbuster and the 700MHz spectrum acquired in the 2008 AWS auction. We get the sense that of the two, Blockbuster is the more important asset here.

* DISH will be using LTE Advanced (the Next-Gen LTE standard). DISH plans to deploy its network based on the LTE Advanced standard, with commercial devices expected to be generally available by 2014. One of the key advantages of LTE Advanced is its support for heterogeneous networks, which increase geographic reuse of spectrum in high-traffic, dense user areas through additional use of pico and femto cells, while still permitting wide coverage in less dense, lower traffic areas using more traditional macro cells.

* There is clearly an over-the-top service on the horizon. As stated in the filing, DISH expects that the consumer equipment will include broadband-capable tablet computers, among other devices. Once the network is deployed, consumers will be able to use their devices for high-speed Internet access as well as a myriad of IP-based, over-the-top applications, including video. (We find it appropriate to remind you of the Sling Box product provided by Echostar in addition to DISH’s portal).

* DISH will have the flexibility to offer the single, double or triple play. DISH is remaining flexible in terms of its broadband offerings and is looking to offer mobile, portable, or fixed broadband services individually or a combination thereof. DISH also anticipates offering broadband services both on a stand-alone basis and in a consumer-friendly bundle with its multichannel video services.”

Ryvicker, by the way, has an “outperform” rating on Dish Network’s stock, with a valuation range of $36-38.