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Is Verizon (VZ) Eyeing DISH Network's Spectrum Assets?

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As per a recent Wall Street Journal report, Verizon Communications

Inc. VZ might soon strike an outright purchase or a leasing deal with DISH Network Corp. DISH for the latter's spectrum assets.

Notably, at a Goldman Sachs investor conference last week, Verizon's CEO Lowell McAdam stated that the company has been in talks with DISH over some kind of arrangement pertaining to the latter's spectrum holdings.

Interestingly, a potential agreement could allow Verizon to utilize some of DISH's frequencies for additional capacity. Meanwhile, DISH will gain access to Verizon's wireless network which will in turn help DISH to come up with its own brand of mobile phone or wireless Internet service.

Story so Far

We remind investors that in Jan 2015, U.S. telecom regulator Federal Communications Commission (FCC) concluded an AWS-3 spectrum auction which registered a record-breaking bid value of $44.89 billion. Notably, AT&T Inc. T emerged as the top bidder, spending $18.2 billion followed by DISH's $13.3 billion, Verizon Communications' $10.4 billion and T-Mobile US Inc.'s TMUS $1.8 billion.

Interestingly, DISH participated in the auction via three designated entities (DE) - American AWS-3 Wireless, Northstar Wireless and SNR Wireless. Immediately after the FCC declared the name of the auction winners on Feb 2, 2015, DISH claimed a 25% discount on the total value of the bid, under FCC's "DE" program.

This implied that DISH would have to pay just around $10 billion to acquire all the licenses that it has won. However, in Aug 2015, the FCC unanimously voted against DISH's claim of a $3.3 billion discount. This was undoubtedly a major setback for the company.

DISH's Spectrum

DISH has created an extensive portfolio of spectrum - arguably, the most important component of wireless networks - over the last two to three years.

Notably, DISH currently has 40 MHz of spectrum in the AWS-4 (2000/2200 MHz) band, 10 MHz in the H-band and 6 MHz of 700 MHz spectrum. Additionally, the company got hold of 702 licenses by winning 25 MHz of AWS-3 spectrum, including 13 MHz of paired spectrum. Notably, AWS-3 spectrum ownership will allow the company to interoperate LTE service AWS-1 (1700/2100 MHz) spectrum band.

Bottom Line

Now, with the Oct 1, FCC deadline looming ahead, it is to be seen whether DISH decides to sell or license out its spectrum to arrange for $3.3 billion to fund the last spectrum purchase.

Both Verizon and DISH presently carry a Zacks Rank #3 (Hold).

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AT&T INC (T): Free Stock Analysis Report

DISH NETWORK CP (DISH): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

T-MOBILE US INC (TMUS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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