The FCC approved the acquisition of both DBSD and TerreStar by Dish Network, giving the satellite TV company new spectrum to expand its services. However, the Commission did not grant Dish the waiver it sought to be able to use the spectrum for wireless data and telephone services.
“Although we are disappointed that the FCC did not grant the integrated service and spare satellite waivers that DISH requested, we appreciate the cooperative spirit and diligent efforts of the Commission and its staff in reviewing our applications. We worked hard to demonstrate that the grant of those waivers was in the public interest, and we wish that we had been successful. We believe that the denial of those waivers will delay the advancement of some of President Obama’s and the FCC’s highest priorities – namely freeing up new spectrum for commercial use and introducing new mobile broadband competition. As we review our options, we will continue working with the FCC on the forthcoming 2 GHz Notice of Proposed Rulemaking (NPRM) to achieve those goals as expeditiously as possible. DISH is committed to helping the Administration and the FCC solve the existing spectrum crunch, and DISH believes that new competition is particularly critical given the expanding world of bit caps and restrictive data plans. We expect to close the DBSD and TerreStar transactions as soon as practicable,” the company said.
Although Dish would have preferred to get the waiver now, Wells Fargo Securities analyst Marci Ryvicker said Wall Street should not have been surprised that the matter has been moved into a Notice of Proposed Rulemaking (NPRM) by the full FCC. “After reading the filing and discussing its contents with industry experts, we view the news as more of a delay rather than a loss given that the waiver was NOT denied in substance. In addition, the filing reads as if the FCC plans to convert the entire block of frequencies from satellite use to cell phone use, which is what Mr. [Charlie] Ergen had requested. BOTTOM LINE: the NPRM delay seems to have been expected; unfortunately, there is still uncertainty, which could weigh on the stock,” she told clients.
She reiterated that the waiver was not denied in substance. “Taking the favorable tone and substance of the entire document, we believe the FCC views Mr. Ergen’s waiver requests as important enough to apply to the entire band of spectrum rather than just to Mr. Ergen’s particular swath, supporting our FAVORABLE view and belief that Friday’s news may suggest merely a timing delay,” Ryvicker said.