How Sensitive Is Dish Network’s Valuation To Changes In Its AWS-4 Spectrum Price?

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Dish Network (NASDAQ:DISH) has evolved significantly over the last few years. Its valuation has increased nearly 2.5X since 2010, and the key components of its valuation have changed drastically. At the end of 2010, most of Dish Network’s valuation was hinged on its core pay-TV business, but that is no longer the case. Now, we estimate that nearly 65% of the company’s valuation comes from the spectrum assets it has amassed over the years. The company has nearly 40 MHz of AWS-4 spectrum, 10 MHz of H-Block spectrum, 13 MHz of AWS-3 paired spectrum, 12 MHz of AWS-3 unpaired spectrum and nearly 24 MHz of 600 MHz paired spectrum. Among these, its AWS-4 spectrum is the most valuable, likely by far. However, the spectrum price and value –  determined by the Price per MHz-Pop – can fluctuate substantially over time. We have created an interactive model that details how changes in the AWS-4 spectrum price can impact Dish Network’s valuation. The image below shows one of the key steps in identifying Dish’s value sensitivity to changes in its AWS-4 spectrum price. We detail how changes in price per MHz-pop impacts the spectrum valuation considering its total population coverage and bandwidth.

We find that a 10 cents change in the Price Per MHz-Pop for Dish’s AWS-4 spectrum (from our current estimate of around $1.20) could lead to a nearly 4% change in its market value. We estimate this by identifying the change in pre-tax value, adjusting it for marginal taxes to calculate post-tax value, and comparing it with Dish Network’s current market cap. 

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