Analysts: Dish may be bluffing about LTE Advanced network buildout

Financial analysts think that Dish Network may be bluffing about its intentions to fully build out a nationwide LTE Advanced network, and that the satellite company may be instead using that as a negotiating tactic to increase the value of its spectrum holdings.

Whatever Dish's intentions, analysts seem to agree that the company's ultimate plans will have a substantial impact on the wireless industry if the company chooses to either partner with another carrier or sell its spectrum. Verizon Wireless (NYSE:VZ) or AT&T Mobility (NYSE:T) might be interested in purchasing the spectrum.

Last week the FCC approved Dish's purchase of 40 MHz of S-band spectrum in the 2 GHz band; Dish paid $2.78 billion to buy the spectrum last year from DBSD North America and TerreStar Networks. However, the FCC did not approve Dish's request for waivers to provide both dual-mode devices and single-mode terrestrial devices to customers who do not want the satellite function. Instead, the FCC plans to begin a rulemaking proceeding that could take until year's end to complete to set guidelines for the terrestrial use of Dish's Mobile Satellite Service (MSS) spectrum.

Dish chief Charlie Ergen "has an asset that he will figure out how to monetize," Marci Ryvicker, a Wells Fargo & Co. analyst, told Bloomberg. "Dish has a lot of options--partnering, selling the spectrum, selling the company--I wouldn't hold Charlie Ergen to anything specific."

Ergen warned last month that a notice of proposed rulemaking could delay Dish's plans, and that "all options would be on the table for how we would move forward with the company and the spectrum." Dish may want to continue to insist that it intends to build a network to increase the value of the spectrum for potential buyers, analysts said.

"It serves him right to say he's willing to build a network even if he's not," Paul Sweeney, a media and Internet analyst with Bloomberg Industries, told Bloomberg. "It's a negotiating tactic. He's saying he's willing and able to build the network to provide maximum value for the spectrum."

BTIG analyst Walter Piecyk told FierceWireless that it's more likely that Dish would seek to strike a network-sharing agreement with another wireless carrier, and mentioned Sprint Nextel (NYSE:S), T-Mobile USA or MetroPCS (NYSE:PCS) as potential partners. However, Piecyk said Ergen's ultimate intentions are still unclear.

Dish, for its part, has publicly pledged to work with the FCC on the rulemaking but continues to insist it needs the waivers. "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," Dish said in a statement last week.

For more:
- see this Bloomberg article

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