Dish Network (NASDAQ:DISH) has been on a spree to buy distressed assets and acquire spectrum on what it perceives as cheap prices. There has been speculation as to whether the company will use this spectrum to enter mobile data/voice market? Dish hasn’t officially disclosed its intentions until recently when it stated in a filing to the FCC that AT&T (NYSE:T) and T-Mobile’s deal could harm competition and potentially discourage Dish Network from entering the mobile broadband market. [1] Clearly the idea is to diversify its risk and position itself better against mounting competition from telecom and cable providers as well as its long-standing rival DirecTV (NASDAQ:DTV).
What is this risk?
Not only does the competition pose a threat to Dish’s presence in the pay-TV market, increasing Internet usage puts it at a disadvantage against cable companies. What if the video viewing shifts drastically to Internet? Comcast (NASDAQ:CMCSA) will still be able to compete in TV but Dish would be vulnerable. By picking up cheap spectrum, Dish is opening up options so that the company can adapt to the online shift as this blossoms. In other words, it would like to straddle the fence by hanging on to its traditional business while providing a streaming option to consumers as preferences shift.
Our price estimate for Dish Network stands at $31.50, roughly in line with the market price.
See our complete analysis for Dish Network’s stock.
Notes:- Dish hints at possible wireless plans in AT&T/T-Mobile deal opposition, FierceWireless, July 11 2011 [↩]
