Dish spectrum sees new interest
It may be better for the company to form a partnership rather than investing heavily in building out the whole network infrastructure.
Sprint (S) recently showed interest in forming a partnership, offering its network for Dish to host its recently acquired spectrum from DBSD and TerreStar. Like the belle of the ball, Dish may now have its choice of partners.
It's unclear if Dish will choose Sprint, AT&T (T), Verizon (VZ) or T-Mobile. But what we do know is that Dish might be better off forming a partnership rather than investing heavily in building out the whole network infrastructure.
Dish is still awaiting a waiver from federal regulators before it can start deploying a 4G LTE network -- the latest, fourth-generation cellular technology. This can take time, and if the company tries to do everything on its own it may find it hard to compete against other major wireless carriers who would have advanced significantly by the time Dish is granted the waiver. Unfortunately for Dish, the timing of its spectrum acquisitions has made it a late entrant into the LTE arena.
Nevertheless, if Dish decides to increase capital expenditures to build its own network, this would lead to reduced cash flows in the near term and a lack of confidence among investors regarding Dish's ability to pull it off. This can hurt the stock and the company alike. In fact, piloting the program of launching its own wireless broadband, and possibly voice service, will be cheaper and safer if the company enters into a partnership to host its spectrum.
We believe that Dish is likely to market this new service under its own brand to create a sense of unified brand for all services.
Our price estimate for Dish Network stands at $31, implying a discount of roughly 5% to the market price.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Looking for a contrarian play? Consider these names that show signs of institutional selling.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.