The FCC approved Dish Wireless’ application to conduct 5G tests in Yuma, Arizona, using T-Mobile spectrum in the 800 MHz band.
The window for conducting the tests is March 6 through September 30, 2023. Specifically, the spectrum is from 817-824 MHz and 862-869 MHz.
The spectrum traces back to when it was held by Sprint and before that, Nextel Communications. Dish has an option to buy the spectrum from T-Mobile if it chooses.
As part of the government’s deal approving the T-Mobile/Sprint merger, Dish was expected to purchase all of Sprint’s 800 MHz spectrum, or about 13.5 MHz nationwide for $3.59 billion. If it doesn’t buy it, it’s supposed to pay $72 million to T-Mobile.
Dish Chairman Charlie Ergen is regularly asked about Dish’s plans for the 800 MHz option, but he’s thus far not revealed what Dish plans to do.
When Ergen was asked about the 800 MHz spectrum last fall, he said “it’s not a must-have for us,” but “nice to have” and what Dish ends up doing would depend on how it’s sitting financially.
Mystery motives
But on the company’s most recent earnings call, he sounded a bit more positive about it. He reiterated that it’s “not a must-have.” But he alluded to “positive developments there” without giving any insights as to what those might be.
“There’s some opportunity there. But we’re not suicidal. We’re not going to sacrifice balance sheet for some short-term gains,” Ergen said, according to a Seeking Alpha transcript.
Also on that call, CFO Paul Orban said “the probability that we would exercise” the option to buy the spectrum from T-Mobile “has increased.”
The executives’ cryptic comments are providing few clues about what’s making the spectrum look more desirable.
Dish has 600 MHz spectrum, and 600 MHz is better than 800 MHz, “so I don’t know why he would buy that,” said Roger Entner, founder of Recon Analytics. “I’m a little bit puzzled. I always thought that they would decide not to buy it, but we’ll see.”
In a note for investors after Dish’s earnings call last month, New Street Research (NSR) analysts said they suspect Dish is considering exercising the option with a partner. Such a transaction could take a number of forms: a partner could fund the purchase of the spectrum and it could be deployed by Dish in their network or the partner may have other users for the spectrum but be interested in securing the spectrum in conjunction with Dish because the price is compelling.
The option has to be exercised by July 1, 2023.