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Why Shares of DISH Network Are Down 10% on Monday

By Lou Whiteman – May 20, 2019 at 1:09PM

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A Sprint/T-Mobile deal could be bad news for DISH, according to one analyst.

What happened

Shares of DISH Network (DISH -3.00%) fell 10% on Monday after the satellite entertainment provider was on the receiving end of a Wall Street downgrade. The issue? The analyst is worried a potential telecom deal will delay DISH from monetizing on some excess spectrum it had hoped to sell.

So what

DISH appears to be moving based on reports that Sprint and T-Mobile are gaining traction toward winning Federal Communications Commission approval for their proposed megamerger. Analyst Jeffrey Wlodarczak downgraded DISH to a hold from a buy on that progress, saying that the likely approval of a Sprint/T-Mobile deal "significantly pushes back the timing" for a sale of DISH spectrum.

A satellite dish pointed up to space in front of a sunset.

Image source: Getty Images.

Wlodarczak had previously argued that a Sprint/T-Mobile deal rejection could have left T-Mobile scrambling for spectrum, perhaps causing the company to get into a bidding war with Verizon over DISH spectrum assets.

If T-Mobile is able to gain access to Sprint's spectrum instead, Wlodarczak wrote, Verizon would be under little pressure to race to get a deal done with DISH or to pay up for the assets.

Now what

DISH also on Monday said it plans to acquire the broadcast satellite service of EchoStar (SATS -3.01%) for $800 million, adding to its spectrum holding. That gives the company more assets to potentially monetize down the road, but it seemingly will not do much to kick-start shares in the near term.

Shares of DISH, even after Monday's decline, are still up 27% year to date. Absent a clear catalyst like a potential spectrum bidding war, it might be difficult for them to climb significantly higher.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

DISH Network Corporation Stock Quote
DISH Network Corporation
$15.20 (-3.00%) $0.47
EchoStar Corporation Stock Quote
EchoStar Corporation
$15.48 (-3.01%) $0.48

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