DISH Network Corp
. (
DISH
) - the second largest satellite TV operator in the U.S. - plans
to ask the Federal Communications Commissions (FCC) for more time
to file a petition against the
Sprint Nextel Corp
. (
S
) and Japan's SoftBank Corp. deal, as the latter plans to
takeover Sprint.
DISH Network's decision to oppose SoftBankCorp.'s proposal to
buy Sprint's 70% stake for $20.1 billion has come up as a result
of Sprint's recent plan to buyback Clearwire Corp. for $2.2
billion.
Earlier, in a report presented by the FCC and Citibank in
2010, Clearwire owed 134 MHz of spectrum belonging to 2.5 GHz
band. So, the acquisition of Clearwire will not only make Sprint
(the third largest carrier in U.S.), the largest Spectrum holder
in the U.S. with 185 MHz of combined spectrum but will also widen
the gap with two top carriers - Verizon Wireless and
AT&T Inc.
(
T
) with 77 MHz and 83 MHz spectrum, respectively.
DISH Network - already holds 40 MHz of satellite spectrum and
recently received - the FCC nod - to utilize those unused
spectrum to set up a wireless network. Consequently, the company
believes that Sprint's decision to acquire full stake in
Clearwire may not only give access to nearly 134 MHz of spectrum
but will also create a much dominant force in the wireless
industry.
Moreover, if SoftBank becomes successful in acquiring Sprint,
it will give access to nearly 184 MHz of spectrum (51 MHz of
Sprint and 134 MHz of Clearwire), hence making a foreign company
the largest holder of spectrum, which is also not in the best
interest of the country. However, Clearwire's spectrums are less
popular in U.S. market as it uses high frequency band while most
smartphone and tablets in the coutry uses low frequency band.
Similar instance took place when the FCC ruled out AT&T's
plan to buyout T-Mobile USA (a U.S. subsidiary of Germany-based
Deutsche Telekom), which may result in a monopoly if the deal
materialized as AT&T will then become the largest holder of
spectrum in the country with nearly 125 MHz spectrum.
So, it is to be seen how the FCC deals with the situation
whether to give its approval to improve spectrum shortage crisis
or to protect the U.S. wireless market from foreign threats.
We maintain our long-term Neutral recommendation on DISH
Network. Currently, it has a short-term Zacks #3 Rank (Hold) on
the stock.
DISH NETWORK CP (DISH): Free Stock Analysis
Report
SPRINT NEXTEL (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
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