Dish Network said it picked up 28 GHz of high-band spectrum and other assets in a swap with EchoStar.
Dish acquired spectrum licenses in the 28 GHz band in four markets as well as a 10% stake in Sling TV, EchoStar Technologies’ hardware and software development group and some real estate, among other assets. EchoStar is receiving 80% of economic interest in Hughes Retail Group (HRG), a group of tracking stocks that follow the retail satellite broadband business.
Barclays said HRG’s 2016 revenue is expected to be in the range of $626 million to $658 million, based on an EchoStar filing.
“With this transaction we will vertically integrate all the elements that define our customer experience—one team will deliver the full Dish and Sling TV experience end to end,” Dish President Erik Carlson said in a press release. “Not only do we gain full control of product development roadmap for DBS and Sling TV, but we also anticipate achieving operational efficiencies.”
Dish continues to sit on a sizable spectrum portfolio, although its plans for those airwaves are unclear, as is the value of that spectrum. Lackluster interest in the FCC’s ongoing incentive auction has led some analysts to suggest that the general value of spectrum appears to be on the wane. However, strong demand may still exist for mid- and high-band airwaves, which provide significantly increased capacity, but don’t have the strong propagation characteristics of the 600 MHz spectrum up for grabs at auction.
Dish may be positioning itself to partner with a carrier to help deliver data-heavy content as 5G technologies and services begin to come to market over the next few years. Barclays analysts suggested. The so-called “quiet period” precludes bidders from discussing any such deals during the incentive auction, but the industry may see a flurry of spectrum-based transactions later this year once the auction ends.
“Overall, it is tough to ignore the timing of the transaction, given the proximity to the conclusion of the incentive auction,” Barclays analysts wrote in a note to investors. “As we highlighted recently, we believe Dish is likely one of the companies that could feel the greatest degree of urgency in trying to combine with a wireless network owner, post the conclusion of the auction. With the asset swap today, Dish appears to be concentrating its wireless assets into one entity along with technology assets that can potentially help with video offerings like DTV Now. In case Dish does contemplate a transaction with a wireless operator, this mix of assets could further help the overall strategic positioning of a potential combination.”