Dish to raise $4B through secured debt offering

Dish Network announced that it’s raising about $4 billion to pay for spectrum and general corporate expenses through a senior note offering to institutional investors.

The offering is being facilitated as an intercompany loan with Dish DBS Corporation. Dish said the loan will be secured by the cash proceeds of the loan and an interest in any wireless spectrum licenses acquired using such proceeds. 

“The net proceeds of the offering are intended to be used to make an intercompany loan to Dish Network in order to finance the potential purchase of wireless spectrum licenses and for general corporate purposes, including the buildout of wireless infrastructure,” the company said in a press release.

What's it all mean in terms of what Dish is up to? "It doesn’t mean a lot yet, because Dish can still raise more money after the auction closes,” said Roger Entner, principal at Recon Analytics, said referring to the ongoing U.S. mid-band spectrum auction. “We shouldn’t read too much into that number. They will spend it on spectrum and to build out the network but it is unclear what the split is.”

Dish is one of the qualified bidders in the 3.45 GHz Auction 110 that’s currently underway at the Federal Communications Commission (FCC). So far, that auction has raised more than $21 billion in gross proceeds as of this morning.

Collectively, Dish has spent heftily on spectrum, but in the C-band auction, Dish spent less than $3 million to obtain just one license in Cheyenne, Wyoming, where it’s been doing 5G trials. 

It’s certainly plausible that the $4 billion being raised is for the 3.45 GHz spectrum. Analysts at New Street Research said they don’t think Dish needs outside funding for the network right now; it ended the third quarter with $2.3 billion in cash and spoke to a buildout over the next 12 months of less than $2 billion, according to New Street analyst Jonathan Chaplin in a note for investors today.

When Dish pulled out of the C-band auction, “we assumed it was because they were pivoting to 3.45 GHz,” Chaplin wrote. “We will be relieved if they get significant holdings in 3.45 GHz. It is important for their strategic positioning and cost advantage. Dish has 19 MHz of CBRS, which is great, but 18 MHz-40 MHz of 3.45 GHz in addition to CBRS would be better.”

What exactly Dish gets in the 3.45 GHz likely won’t be known for at least another month, as auction rules forbid disclosures about who’s bidding for what until the auction closes and the FCC releases the results. New Street analysts expect the clock phase of Auction 110 to wrap up by the end of this week, with the assignment phase completing in early December and results announced in mid-December. Companies don’t need to make down payments on their spectrum until at least January 7, 2022, because of special rules for this auction, they noted.

Dish, which is building a 5G network from scratch based on virtualization and open radio access network (RAN) technology, is in a beta test mode in Las Vegas, where it expects to continue working over the course of the next 90 days. It plans to launch sometime in the first quarter of 2022.

RELATED: Dish’s Dave Mayo talks about ‘audacious’ effort to deploy greenfield 5G network

During its third-quarter conference call last Thursday, Dish management said they have building permits in two-thirds of the sites for which they’re required to build out to meet 2022 requirements, and they’re now in 42 markets with construction activity. Dish expects to start building in the new year in markets that are due for coverage in 2023.