Dish Network is trying to become a viable fourth facilities-based 5G carrier in the U.S. wireless industry, but its dire financial situation is causing folks to consider how much its spectrum will be worth if it that plan doesn’t pan out.
Dish Chairman Charlie Ergen acknowledged earlier this year that Dish needs to address its “liquidity” situation. More recently, during Dish’s Q3 earnings call, he said “we have narrow path but there is a path for us to achieve financial stability and make sure we meet our commitments.”
The company has seen narrow paths before, and “necessity is sometimes the mother of invention,” Ergen said.
Whichever path Ergen & Company decide to take, some analysts are predicting that bankruptcy will be the end game. According to a November 6 investor report by Craig Moffett of MoffettNathanson, Dish’s Q3 earnings likely accelerated the “overwhelming probability” that Dish will enter bankruptcy sometime in the next few years.
If a liquidation were to happen, it’s possible that Dish’s spectrum would cover its debt and still leave some equity, Moffett said. However, “spectrum valuations in this case are just as much guesswork as are estimates for the wireless business as a going concern. Virtually every spectrum band that Dish owns is subject to legal and regulatory encumbrances,” such as Department of Justice (DoJ)/FCC sale restrictions, pre-existing debt or litigation.
To be clear, Dish hasn’t said anything about any kind of spectrum sale right now – it’s actually trying to acquire more spectrum via an 800 MHz deal with T-Mobile. Dish has until April 1, 2024, to come up with the financing for that transaction, which, if done, would give Dish more low-band spectrum to compete with AT&T, T-Mobile and Verizon.
Recent transactions & valuations
A New Street Research (NSR) report published today sizes up Dish Network’s spectrum portfolio, with a conservative estimate being $57 billion, and on the high end $91 billion if sold in 2026 or later.
To come up with some of their estimates, NSR analysts used valuations from recent deals, such as Liberty Latin America’s purchase of wireless assets from Dish in Puerto Rico and the Virgin Islands, as well as T-Mobile’s separate deals to buy 600 MHz spectrum from Comcast and Columbia Capital. They also segment the spectrum into three categories: low band, lower mid-band and upper mid-band.
The book value of Dish’s portfolio is $29 billion; however, most bands have increased in value since they were acquired. AWS-4 has appreciated the most, according to NSR.
“If we revalue just the portion of AWS-4 that is part of Band 66, the 600 MHz and 3.45 GHz based on appropriate precedents, we arrive at a market value of $57BN. If we revalue all bands, we get to $90BN+,” wrote NSR analyst Jonathan Chaplin.
The most likely buyers of Dish’s spectrum are the Big 3 wireless carriers: AT&T, T-Mobile and Verizon, all of which would be subject to FCC spectrum screens. On top of that, none of them are exactly in a position to buy more spectrum at this point, and Moffett points out that they’re pursuing fixed wireless access (FWA) in large measure because they have excess capacity that they can’t find another way to fill.
If Dish were to sell spectrum in bits and pieces, its valuation will depend in part on where it’s located geographically. For example, a license in Scottsbluff, Nebraska, likely would be priced at a lower value compared to one in New York City. That’s why Spektrum Metrics, a Seattle-based consultancy, uses a computing tool that calculates spectrum prices down to a county level.
Brian Goemmer, president of Spektrum Metrics, said it would be too much, based on each carrier’s spectrum screens, for all of Dish’s spectrum to be swallowed by one carrier. “I think there are pieces of Dish’s spectrum that are more natural matches,” he told Fierce.
For example, the 600 MHz spectrum is a natural match for T-Mobile, but T-Mobile is bumping up against its low-band spectrum screen due to the amount of spectrum it already has in that band, Goemmer said. (Separately, in response to AT&T’s petition for a mid-band spectrum screen, Dish accuses T-Mobile of continuing to build a “magenta wall” in the 600 MHz band, balkanizing the 600 MHz band to T-Mobile’s advantage.)
As for Dish’s 700 MHz E-block spectrum, that’s a natural fit for AT&T, Goemmer said. If AT&T were to acquire Dish’s 700 MHz E-Block, that would be advantageous to AT&T; however, it’s also “very special purpose” spectrum and with AT&T being the only one really interested in it, that lessens the value, he said.
Sell some, but continue to operate?
The AWS-4 spectrum would be the most likely to sell “because the spectrum can be split easily,” Goemmer said.
Whereas “the AWS-3 spectrum involves licenses for multiple markets covering the G, H, I and J channels (all in NR Band 66), the AWS-4 spectrum could be split into the NR Band 66 spectrum (20 MHz downlink) and NR Band 70 spectrum (20 MHz downlink),” he said. “This would allow Dish to continue to operate the AWS-3 spectrum for capacity” and use the NR Band 70 spectrum to grow their downlink capacity while selling the NR Band 66 spectrum to one of the other national carriers.
“If I had to say what spectrum could Dish give up that would still allow them to operate, that would be one place to look,” he said.