With Dish Network on our mind, how are they planning to pay the $3.3 billion they owe the government? Remember, they used two Designated Entities to do their bidding during the AWS-3 auction. The FCC wasn’t on board with that and decided Dish didn’t qualify for the billion dollar discount. Kannan Venkateshwar on Barclays believes that Dish’s recent filing seeks an extension for the $3.3 billion. The analyst noted that this could imply the company is looking at some form of corporate restructuring with the ultimate intention of monetizing spectrum, with spectrum leasing being one of the likely options.
“In our view, while both [Dish and Verizon] are not in a hurry to enter into a deal until the auction, there could be incentives to be more flexible now,” Venkateshwar wrote. The incentives Barclays is talking about are: (1) Dish’s negotiating leverage eroded post AWS-3 as Verizon bought an enhanced spectrum portfolio and as Dish’s post-auction leverage was made worse by the DE credit loss; (2) With new entrants like Altice and with Charter, Comcast talking more actively about wireless, Verizon could use this opportunity to exclude the possibility for new competitors if Dish’s spectrum was made available. Simultaneously, Verizon could bolster its portfolio as it focuses on a wireless-centric strategy; (3) If Dish is unable to do a deal before the incentive auction anti-collusion period begins (potentially end-2015 or early 2016), Dish and Verizon could find it difficult to speak to any potential partner for another year (Barclays).
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