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?
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.
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