Dish Network Hints at New Spectrum Possibilities As Network Construction Moves Forward

Dish Network’s DISH fourth-quarter raises new questions as the firm increased the carrying value of a spectrum option on its balance sheet during this quarter. Otherwise, results were largely as expected. The wireless network buildout appears on track to hit 2023 coverage deadlines, with 17,000 sites on air or under construction and 1,000 new sites starting construction each month. Boost Infinite, its postpaid wireless offering, remains in beta testing with plans to ramp up marketing later this year as network coverage expands. Dish is also hopeful that the next Apple iPhone will be certified to run on its network, adding to devices from Motorola and Samsung. We are maintaining our $31 fair value estimate, but reiterate that Dish still faces substantial uncertainty as it gets its wireless business off the ground.

Dish has the right to acquire 800 megahertz spectrum licenses from T-Mobile for $3.6 billion later this year. The firm had valued this right on its balance sheet at around $700 million, but increased this amount by $1 billion during the fourth quarter, based on increases in the value of similar assets and the probability of exercising the option. With Dish’s weakening financial position and the high cost of financing it faces, this purchase looks unnecessarily challenging, especially given the firm has plenty of fallow spectrum to work with for now. However, it could be working on a deal to exercise its option and immediately sell spectrum, which would raise much-needed capital. Management would only say there have been positive changes around the spectrum option recently.

The television and wireless businesses returned to customer losses after a brief respite during the third quarter. Dish lost 24,000 net wireless customers as churn remains elevated, which management blamed on a billings system transition. The television business shed 268,000 net customers, ending 2022 with 9% fewer than the year before.