Dish Network (NASDAQ:DISH) had an exciting last year as it witnessed fluctuating subscriber additions, settled critical lawsuits and got FCC approval to build a nationwide wireless network. There couldn’t have been a more fitting start to 2013 than Dish starting a bidding war with Sprint (NYSE:S) for the proposed acquisition of Clearwire (NASDAQ:CLWR).  This was a surprising move as we didn’t expect the company to go against Sprint, who was actually willing to partner with Dish to launch its wireless service. However, it appears that Dish has bigger ambitions or is using this maneuver to gain leverage.
What Is Dish Network’s Master Plan?
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- Why Have Dish Network’s Revenues Increased ~20% While EBITDA Has Decreased ~20% In The Last Five Years?
It is no news that Dish Network has been amassing spectrum through a series of acquisitions. There is a looming spectrum crunch in the U.S. wireless industry given the increasing data needs of mobile customers. Realizing this spectrum crunch and the associated opportunity, Dish Network has been strategically playing its cards and has acquired spectrum assets from TerreStar and DBSD North America.
Dish has been smart in its approach, realizing that even if it cannot build its own wireless network, it can at least sell the spectrum for a substantial profit. The company’s gamble paid out as the FCC granted permission to Dish to build a ground-based wireless network in the U.S. As a result, the spectrum’s valuation skyrocketed to $12 billion. 
Dish’s proposed acquisition of Clearwire indicates that it just doesn’t want to build a wireless network, but desires to become one of the major players that can challenge the existing telecom giants. It is unlikely that Dish’s bid will be approved given that Sprint already holds a 50% stake in Clearwire. However, the move could certainly help Dish in a couple of ways. First, if Dish is able to acquire even a non-controlling stake in Clearwire, it could give it the upper hand in negotiating a potential partnership with Sprint or other carriers. Second, the bidding war for Clearwire could influence the value of spectrum, thus raising the value of Dish’s own spectrum. This is again favorable for Dish Network’s market value.
Dish has struggled in the saturating U.S. pay-TV market and is directing some of its attention towards wireless. If successful, this approach could make it a formidable competitor in the long term as the company could bundle wireless services with pay-TV.
Our price estimate for Dish Network stands at $36.20, roughly in-line with the market price.Notes: