Dish is behaving magnanimously during the coronavirus pandemic to provide its unused spectrum to other carriers so that they can increase the capacity of their networks. Today, Dish said it will be lending 20 MHz of its AWS-4 (Band 66) and all of its 700 MHz spectrum to AT&T, starting immediately. Dish will provide the spectrum to AT&T at no cost for 60 days.
This follows last week’s news that Dish would lend its complete 600 MHz portfolio of spectrum to T-Mobile.
According to analyst Jonathan Chaplin at New Street Research, AT&T will be able to deploy the AWS-4 spectrum quickly and easily using its AWS-1 and AWS-3 equipment. In addition, AT&T can use Dish’s 700 MHz E-Block in conjunction with the D-Block that AT&T has started deploying in some markets.
Analysts are speculating that these loans during a time of crisis might later be turned into ongoing leases.
Loans to leases?
Based on a made-up spectrum value of $1/MHz-POP and assumed lease payments based on a 6% cost of capital, New Street calculated that if the AWS-4 loan was converted to a lease after 60 days, it could be worth $380 million annually to Dish. And the 700 MHz could fetch $60 million annually, if it were converted into a lease.
In addition to loaning spectrum to T-Mobile and AT&T, Dish was given permission yesterday by the FCC to also loan spectrum to Verizon.
“All told, Dish has now loaned out spectrum that could be leased at an annual run rate of $940 million,” writes Chaplin. “They still have the PCS H-Block and another 20 MHz of AWS-4, which would be worth another $580 million.”
New Street is clear though that it’s just speculating. “All we know at this stage is that Dish is helping in a crisis; we don’t know that either side would be willing to convert the loan to a lease,” writes Chaplin.
But Dish’s generosity in lending its spectrum during the coronavirus scare is highlighting how helpful the spectrum is to other operators in order to increase their capacity.
Wells Fargo analyst Jennifer Fritzsche wrote, “Once this crisis passes, we believe the heavy demand on wireless and wired networks will shine the light on the need for additional spectrum allocation and continued programs to support push-out of broadband into rural areas to lessen the digital divide.”
There might be legal implications, though, in order for any of this spectrum lending to extend beyond the COVID-19 crisis. As part of Dish’s role in the T-Mobile/Sprint merger, Dish made various promises about selling or leasing its spectrum to any of the three largest wireless providers.
The restrictions were part of the deal to ensure that Dish doesn’t just quickly sell or lease its key spectrum assets, rather than building a nationwide 5G network as it’s promised to do.