In to implement its wireless deployment plan,
) -- the second largest satellite TV operator after
), plans to raise nearly $1 billion through its subsidiary DISH
DBS Corp. The amount will be raised by issuing senior notes.
Fitch has rated BB- to the company's recent debt offering
Last year, DISH Network raised nearly $4.4 billion through the
issue of senior notes. We consider two aspects for the company to
raise such a huge amount of debt during the period.
Firstly, DISH Network gained the much-awaited FCC approval to
set up wireless network across its footprint. So, DISH's plan to
set up wireless network without any wireless partner will be an
extremely difficult task as it requires a huge investment and
Secondly, there is a growing shortage of spectrum in the
country. So, we believe that a mere 40 Mhz of spectrum will not
be enough for DISH Network to establish a strong foothold in the
U.S. To overcome that, the company may acquire further
To materialize both its objectives, DISH Network bided for
) at $3.30 per share. Clearwire currently holds a 2.5 GHz band of
spectrum, which is suitable to deliver huge data, mainly
comprised of HD videos. It also offers fixed and wireless
services in the U.S.
However, the deal looks to be a distant dream as the parent
company of Clearwire,
Sprint Nextel Corp.
), plans to acquire full stake of its sister concern at $2.97 per
DISH Network exited fiscal 2012 with an enormous $11.6 billion
in long-term debt and $7.4 billion in cash. So, a further issue
of debt will increase the financial risk for the company in terms
of higher interest payments and increased leverage.
In the next five years, senior notes worth $4.7 billion will
mature. Moreover, a debt of $500 million will be due in the
current year. Hence, we believe that constant maturity of debt
during this five-year period will not only affect DISH Network's
cash position but will also impact its future plan to rollout
mobile broadband network across its footprint.
DISH Network currently has a Zacks Rank #3 (Hold).
CLEARWIRE CORP (CLWR): Free Stock Analysis
DISH NETWORK CP (DISH): Free Stock Analysis
DIRECTV (DTV): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
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