According to a recent report by The Wall Street Journal, The U.S. telecom regulator Federal Communications Commission (FCC) has decided to reject DISH Network Corp. 's DISH claim of a $3.3 billion discount on its total bid to acquire airwaves in the recently concluded AWS-3 spectrum auction. If the news comes true, it will be a major setback for the company which has developed a strong portfolio of wireless spectrums over the last 2-3 years.
In Jan 2015, the FCC had concluded its AWS-3 spectrum auction which registered a record-breaking bid value of $44.89 billion. Notably, AT&T Inc. T has emerged as the top bidder, spending $18.2 billion followed by DISH ($13.3 billion), Verizon Communications Inc. VZ ($10.4 billion) and T-Mobile US Inc. 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 that it is eligible for a 25% discount on the total value of winning bids under FCC's "DE" program.
This implies that DISH will have to pay just around $10 billion to acquire all licenses it has won. However, FCC Commissioner Mr. Ajit Pai has strongly expressed his reservation about DISH's practice. He has argued that the DE program is aimed at encouraging the participation of small wireless operators in the airwave auction which DISH has unduly taken advantage of.
Notably, DISH is the second largest satellite TV operator in the U.S. with annual revenues of almost $15 billion. The company already holds a strong portfolio of wireless spectrums. DISH holds 85% stake of both Northstar Wireless and SNR Wireless. Despite this the two companies have appealed for the small-business discount which largely violates the morale of the DE program.
In a separate development, Bloomberg yesterday reported that DISH's talks to acquire T-Mobile US have stalled over concerns related to valuation and structure. DISH has been negotiating with Deutsche Telekom AG, the parent company of T-Mobile US regarding full takeover, however nothing concrete has emerged so far. DISH currently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report