Dish builds $5.6B cash pile for wireless play

Dish Network has amassed a massive cash hoard of $5.6 billion to advance its wireless interests as the company awaits rules from the FCC on its spectrum that will likely determine its next moves.

According to Bloomberg, which cited calculations from KDP Investment Advisors, Dish raised its cash on hand to $5.6 billion as of June 30 from about $2.7 billion in the first quarter. There is a great deal of speculation over whether Dish will use the money to build out its own wireless network or acquire a smaller wireless carrier. Dish declined to comment on the use of money beyond "general corporate purposes," according to Bloomberg

Dish, which noted last week it lost a net of 10,000 subscribers in the second quarter, is trying to transform itself from a pure video player to one with a wireless delivery component that can offer a range of data services. To that end, Dish is building up its cash reserves, and it issued $2.9 billion of five- and 10-year notes in sales in May and July, including $1 billion last week.

Investors and analysts have been waiting along with Dish for the FCC to release its rules for how MSS spectrum is governed. In the meantime, Dish is putting the pieces in place to make its wireless ambitions a reality. In June Dish inked a deal with Qualcomm (NASDAQ:QCOM) for dual-mode chipsets to support devices running on its planned LTE Advanced network as well as via satellite.

Dish has said it is open to pursuing a partnership with a wireless carrier to help its bid, and in June Dish Chairman Charlie Ergen said that "obvious" carrier partners include Sprint Nextel (NYSE:S) and T-Mobile USA. However, Dish may pursue an acquisition of a smaller carrier like MetroPCS (NASDAQ:PCS) or Leap Wireless (NASDAQ:LEAP), though their spectrum holdings do not pair well with Dish's spectrum.

"If they [Dish] were to be able to acquire a smaller wireless provider, that would kind of get their foot in the door," Monica Erickson, a money manager and credit analyst at DoubleLine Capital, told Bloomberg. Leap "would be a relatively small, or manageable acquisition."

Ergen has seemed fairly sanguine about Dish's wireless ambitions, despite uncertainty over whether the FCC will grant Dish a waiver that would allow it to sell terrestrial-only devices, which Dish has argued is essential to its business plan.

Dish said in a filing to the FCC in May that it will not be able to launch its proposed LTE Advanced network using its spectrum until 2016 or later. This is about 12 months longer than the FCC's current proposed buildout schedule, which requires Dish to launch its network in three years covering 30 percent of the U.S. population. However, Dish has indicated that when it does launch its network, it will cover 60 percent of the U.S. population.

Dish has said that it will take at least 48 months from the time the 3rd Generation Partnership Project finalizes the S-band specifications for LTE Advanced for Dish to launch its network. The 3GPP is not expected to finalize those specs until December, which means that Dish will not launch its network until at least December 2016 or later.

Dish, which paid $2.78 billion in 2011 for its spectrum in bankruptcy proceedings, has argued that the FCC's buildout requirements are not feasible and are not in line with similar requirements for terrestrial services. For example, Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) have 10 years to cover 75 percent of the population using the 700 MHz spectrum licenses they won at auction.

For more:
- see this Bloomberg article

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