Dish still confident it can effectively monetize its spectrum, Jefferies says

Dish Network (NASDAQ: DISH) executives maintain that the company will be able to effectively monetize its spectrum and aren't worried about missing the FCC's deadline for leveraging those airwaves, according to analysts at Jefferies.

Jefferies analysts attended meetings with Dish CEO and co-founder Charlie Ergen as well as Sling TV CEO Roger Lynch and said in a subsequent research note that the management team "remains confident in the strategic value of its spectrum holdings and the optionality such holdings afford the company." And while analysts continue to debate the value of Dish's spectrum, three of the four major U.S. carriers are expanding their networks in the AWS-3 band, which is mid-band airwaves that account for much of Dish's holdings.

"Management believes such spectrum is much better suited for data-centric usage patterns, while noting low-band was perfect for legacy voice usage. With that in mind, management noted that national carrier spectrum holdings would likely be sufficient to support long-term needs, particularly as more bandwidth-intensive applications such as 4K video and virtual reality move into the mainstream," Jefferies analysts wrote.

"Management expects the vast majority of chipsets in 2017 to support Band 66 (approved in December 2015) and with Band 70 specs likely to be approved later this month, we suspect inclusion in chipsets would not be too far behind," Jefferies continued. "Separately, AT&T, T-Mobile, and Verizon will all be building out AWS-3, so the opportunity exists to partner for an efficient build. While the debate is likely to continue, management dismissed the possibility of missing an FCC deadline."

The research note comes just a day after Dish announced it had designated all 40 MHz of its AWS-4 spectrum for downlink operations, a move that was widely expected to boost the value of those airwaves. Dish also said that it expects the 3GPP will approve Band 70 later this month, which will combine unpaired AWS-3, AWS-4 and H Block airwaves "into a single efficient spectrum plan."

Just how Dish will leverage its sizable spectrum assets remains unknown, of course. It could simply sell them and walk away with a tidy sum, or it could partner with an existing service provider or a newcomer to the space, perhaps paving the way for a disruptive entrant and even an innovative business model.

"Management believes domestic and foreign carriers as well as Cable companies could all be interested," Jefferies analysts wrote. "Internet companies could also become part of the discussion, particularly if Wireless is ultimately excluded from net neutrality rules. The end of the auction and elections are likely to serve as catalysts for Dish given evolving wireless strategies in the market. The preference remains to keep the video and spectrum businesses together, tough certain consolidation scenarios could warrant separating the businesses."

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