Dish Enjoys a Spectrum of Options

[Commentary] Dish won $13.3 billion worth of wireless spectrum licenses in the government’s recent auction, far more than most analysts expected. With the new additions, Dish now has roughly as much spectrum as T-Mobile US . Yet it still lacks a network to put those airwaves to use, leaving investors trying to fathom Chairman Charlie Ergen ’s plans.

Amid the theories, one thing is clear: Dish’s massive spectrum holdings make it increasingly difficult for phone carriers to ignore. For Dish to realize the full value of its spectrum holdings it may need to sell its licenses – or itself. Buying Dish has become a more expensive proposition. Indeed, while Verizon may have balked at Ergen’s demands before the auction, purchasing the satellite company then would at least have saved it the takeout premium on Dish’s new spectrum and also kept an aggressive bidder out of the auction. But Verizon, or another buyer, may still have reason to act. Dish could have another plan to generate value from its spectrum: namely, building a wholesale business to lease it to other carriers. That could be even more lucrative down the line than a straight sale, according to estimates by New Street Research.