Where Does DISH Go From Here?

Last week, I predicted that DISH Network (NASDAQ: DISH  ) would take the cake regarding the Clearwire buyout battle. Getting a taste of my own "you can't predict M&A outcomes" medicine, I was wrong, as DISH has backed out of the Clearwire deal, leaving it to telecom heavyweight Sprint. The question now, beyond the validity of my clairvoyance, is where DISH will take its crusade for more spectrum and more infrastructure to launch its much-anticipated broadband network.

Zero for two
Wednesday's news signals the end (for now) of an epic M&A battle among DISH Network, Clearwire, Sprint, and SoftBank. For a while, it seemed that DISH had moved swiftly and delicately, disrupting Sprint's original proposed acquisition of Clearwire, as well as SoftBank's proposed acquisition of Sprint. Last week, the battle for Sprint swung in favor of SoftBank, and now, Clearwire is likely headed to Sprint.

So what is Charlie Ergen's DISH to do?

Options
DISH's acquisition personnel are far from taking a vacation, despite the Clearwire deal falling through. The company, reportedly, has a $2 billion offer for bankrupt wireless company Lightsquared's most valuable asset: its spectrum. Phil Falcone's Lightsquared, similar to DISH, had lofty visions of an LTE network, and generated a ton of investor interest early on. But with roadblock after roadblock (and some potential financial mismanagement), the company was unable to put to work its spectrum hoard, and soon filed for bankruptcy.

Though the deal is only in its preliminary stages, and Bloomberg reports the offer is more of a "stalking horse bid," Lightsquared's spectrum would be of specific benefit to DISH, given that it's licensed for Mobile Satellite Service (referred to by the FCC as MSS). Currently, DISH is the second-largest holder of not-yet-deployed MSS, behind Lightsquared. The biggest holder of currently licensed and deployed spectrum is Clearwire.

Keeping in mind the beginning of this article, I can't speculate as to whether DISH will be successful in obtaining Lightsquared's prize asset. If it does, however, it will, once again, be game on for DISH and its investors.

In the meantime
The DISH play is a difficult one for the retail investor. The company is well managed and, if successful in its network buildout, will be on par with the major telecoms. But that's a big "if."

DISH's biggest direct competitor, DIRECTV (NASDAQ: DTV  ) , is a much more clear-cut investment. The company's Latin American operations are still flying high (though not as high as originally reported in the first quarter), and even the domestic business is showing growth from premium subscriptions. DIRECTV is also rumored to be the winning suitor for streaming content provider Hulu -- giving the satellite company a formidable position in the red-hot space.

If choosing between the two, I prefer DIRECTV, based on its transparency going forward. DISH may very well be a lucrative play, but there are many, many hurdles the company must still clear before it can declare a victory.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2514454, ~/Articles/ArticleHandler.aspx, 11/27/2014 1:53:48 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement