DISH Network Is on the Verge of Adding Even More Spectrum to Its War Chest

DISH Network (NASDAQ: DISH  ) scored a victory on Tuesday, after a judge dismissed a lawsuit brought against it in regards to its bid for LightSquared's spectrum. DISH Network is expected to aggressively pursue, and possibly acquire, LightSquared's spectrum assets out of bankruptcy.

Those assets, combined with DISH's existing spectrum, continue to make the company an interesting (though not yet active) player in the wireless industry. A merger or deal with T-Mobile (NYSE: TMUS  ) or even Sprint (NYSE: S  ) still seems quite likely.

DISH's spectrum war chest
Since 2008, DISH has spent almost $4 billion acquiring wireless spectrum that it has yet to put to use. Still, it's been a good investment -- the value of that spectrum has more than doubled. Now DISH is doubling down: Assuming it is able to acquire LightSquared's assets, a possibility that looks ever more likely in light of its legal victory, it is expected to spend almost another $4 billion on spectrum.

DISH could simply sit on that spectrum, allowing it to appreciate in value, or selling it to another wireless player. But based on DISH's recent moves, it appears it wants to put that spectrum to use itself.

A tie-up with Sprint is still possible
Earlier this year, DISH tried and failed to merge with Sprint. Ultimately, the majority of Sprint was sold to Japan's SoftBank, but not before DISH was able to do due diligence on the company. That knowledge is a competitive edge, making a future tie-up even more likely, according to DISH's Chariman Charlie Ergan:

[DISH Network] just know[s] [Sprint and Clearwire] really well. We know their networks...so we know we fit pretty well with where they might want to go...the SoftBank executives...seem very innovative...their best was better than ours...I like people that are better than us. I want to hire people that are better than us, and I like to work with people that are better than us. So that's why I say...that might be an interesting fit.

Ergan went further:

I think there's a lot of options to working with Sprint. I think they're pretty innovative...We like their management team. We like -- we thought they had tremendous spectrum...with Clearwire...it's a great asset...we know that asset pretty well, and we know we fit pretty well with it.

Although SoftBank plans to invest billions into Sprint, the carrier remains in a tough spot, bleeding hundreds of thousands of subscribers every quarter. Sprint's recently unveiled Spark technology could eventually help to reverse that trend, but it remains in distant third place behind AT&T and Verizon.

T-Mobile would be open to a merger
The other obvious tie-up would be T-Mobile. The nation's fourth-largest carrier has been aggressive in recent months, unveiling programs like Jump and free data for tablets. These appear to be working; T-Mobile added 688,000 post-paid subscribers last quarter.

But longer-term, the situation is less clear. T-Mobile's CEO John Legere is open to a merger with DISH, saying that he's "intrigued" by DISH's vision in the medium-to-long term. DISH, too, appears to be interested. On the company's last earnings call, Ergan said that while company could still work with Sprint in some way, the best bet at a full-blown merger would be T-Mobile:

Certainly, T-Mobile...this is a company, you could put...together with DISH in any number of ways, including an acquisition or a merger...you just look at a full-blown acquisition or a merger and really, that's probably only T-Mobile at this point in time.

DISH continues to push forward in wireless
Despite being denied Sprint, DISH continues to push on, undeterred. With its recent legal victory, DISH looks poised to add LightSquared's spectrum assets to its existing cache. Eventually, DISH will have to put this to use, and when it does, it will likely involve some sort of a deal with T-Mobile or Sprint.

Both carriers have been solid performers over the last year, and though they remain in distant third and fourth place behind AT&T and Verizon, there's obviously value in their businesses.

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