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Saarang Hero Username: Saarang Post Number: 15828 Registered: 06-2012 Posted From: 206.29.176.75 Rating: N/A |
https://www.bloomberg.com/politics/articles/2017-04-13/with- 6-2-billion-spectrum-spree-ergen-buys-himself-options https://www.bloomberg.com/politics/articles/2017-04-13/with- 6-2-billion-spectrum-spree-ergen-buys-himself-options | ||
Saarang Hero Username: Saarang Post Number: 15827 Registered: 06-2012 Posted From: 206.29.176.75 Rating: N/A |
Dish Network Corp. spent a surprising $6.2 billion on wireless airwaves in a government auction, a big splurge that did little to address questions about the endgame for billionaire Charlie Ergen’s satellite company. Only T-Mobile US Inc. bid more in the auction, spending $8 billion out of the $19.8 billion in total proceeds. Dish’s hefty purchase jolted investors and bedeviled analysts, as the company already sits on one of largest troves of spectrum in the industry -- and still doesn’t actually provide a wireless service. It’s anyone’s guess what Ergen will do next: Sell Dish? Become a phone company? Sit and wait? Dish now controls a much more diverse spectrum portfolio that gives Ergen plenty of options. The Englewood, Colorado-based company has airwaves that are ideal for streaming movies as well as maintaining a cellular signal over long distances. It could decide to package the licenses together for a sale to wireless carriers or cable companies -- or use the frequencies it just bought to fulfill a promise to the Federal Communications Commission by launching a network focused on enabling devices to exchange information. “The big surprise to us was the amount of spectrum that Dish won -- $6.2 billion versus our estimate of nothing,” said Marci Ryvicker, an analyst at Wells Fargo & Co., in a note Thursday. “Maybe we shouldn’t be that surprised given the attractive pricing and Charlie’s penchant for purchasing spectrum, especially when it’s a deal.” Prices for this auction were significantly lower than a U.S. airwaves sale that ended in 2015 and drew $44.9 billion in bids. The average price per megahertz per U.S. resident was about 90 cents, compared with $2.72 in that sale, said Kevin Roe, of Roe Equity Research LLC. Comcast Corp. and AT&T Inc. were among the other significant bidders. Buying more spectrum without clear plans for the future has spooked investors. Dish shares fell 2.5 percent to $62.38 at the close Thursday in New York. “Wall Street gets nervous because the payoff is uncertain,” said Roger Entner, an analyst at Recon Analytics LLC. “Charlie is really good at acquiring spectrum but not good at building a network or selling it.” If Ergen does end up selling Dish, who would buy it? Verizon Communications Inc. didn’t bid at all in the auction and AT&T Inc. acquired nearly $1 billion worth of spectrum, far less than it’s done in the past. This suggests the two largest wireless carriers may not be interested in the spectrum Dish acquired, making an acquisition less likely, according to a Bloomberg Intelligence analysis. “We’ll state the obvious. Dish bought so much in incentive auction and $VZ, $T so little, because... there’s no actual rational answer,” short-seller Kerrisdale Capital Management LLC said in a tweet, referring to Verizon and AT&T by their ticker symbols. The investment firm last year issued a report that argued the satellite provider’s airwaves are overvalued. Closing the Gap The airwaves auctioned by the FCC were voluntarily surrendered by TV stations so the frequencies can be repurposed for surging wireless data traffic. Stations are getting $10 billion in payments to go off the air or move to other airwaves. As the top bidder, Bellevue, Washington-based T-Mobile gained ground on AT&T and Verizon in holdings of spectrum in lower frequency bands, which is prized for its ability to penetrate walls and cover wide areas. With the purchase, T-Mobile now owns 41.1 megahertz of spectrum below the 1-gigahertz frequency, compared with 46.2 megahertz for Verizon and 70.5 megahertz for AT&T, according to Bloomberg Intelligence. Comcast, which plans to unveil a new wireless service that uses Wi-Fi hotspots and Verizon’s cellular network, bid $1.7 billion on airwaves, much less than expected, according to Macquarie analyst Amy Yong. About a quarter of the investors Yong surveyed thought the cable giant would spend as much as $6 billion. AT&T’s acquisition of less than $1 billion worth of spectrum means it’ll get a refund of about $1.4 billion from a deposit it had made with the FCC to participate in the auction. The Dallas-based phone carrier will reap rich rewards from operating the first nationwide emergency communications network and thus may not have needed the airwaves as much as others. AT&T declined to comment. Verizon, the largest wireless carrier in the U.S., and Sprint Corp. didn’t bid at all. “By not bidding, Verizon let the other bidders get away with airwaves far more cheaply,” said Entner. Verizon may have steered clear from the auction in part because it’s thinking of buying Dish’s spectrum later, Roe said. “Verizon’s need for more urban capacity makes Dish’s spectrum a natural fit,” he said. Verizon declined to comment. Shares of Verizon, AT&T and Comcast fell less than 1 percent at the close in New York Thursday, while T-Mobile rose slightly. |