DISH Working Page


DISH FCC Filing 3.8.17

DISH-Sprint Merger Presentation April 2013

DISH-Sprint Merger Rebuttal – Scott Chandler


Beyond LTE


Supplemental Downlink

QCOM Supplemental Downlink Overview

DISH 150Mbps LTE Wireless Broadband

CSCO VNI Mobile Data White Paper


May 2015

  • DISH comprised of four core assets:
  1. Satellite PayTV biz – 13MM subs; $3B EBITDA
  2. SlingTV – $20/m OTT bundle
  3. Small cells platform – 13MM rooftops
  4. Wireless spectrum – 55 MHz
  • DISH led by Chairman/majority owner Charlie Ergen
  1. Owns 50% of the Company; stake worth $14B at current prices
  2. Started DISH and ECHO in 1996 from standing start
  3. Uncanny ability to create “heads I win, tails you lose” optionality
  4. Intensely focused on ROIC – refuses to chase customers and market share at any cost
  5. Long term focused – willing to invest capital well in advance of returns, regardless of “Street” opinion
  • PayTV biz is dying a slow death due to “Over The Top” (OTT) viewership by “cord-cutters”
  1. Ergen himself surprised DISH PayTV has held up as well as it has
  2. Ergen began positioning DISH for the shift to OTT well in advance of the recent cord-cutting acceleration
  3. Wireless spectrum the key to DISH’s future
  • DISH mobile video
  1. Spectrum is simply a license to broadcast signal over a particular band (channel)
  2. Traditionally used for broadcast TV and mobile voice networks, spectrum now utilized for mobile broadband (think monthly mobile data packages)
  3. Bands labeled by megahertz (MHz); “depth” also measured in MHz; for example, DISH owns 10 MHz of the 700 MHz E-band 
  4. DISH’s spectrum portfolio is underpinned by a core position in 40 MHz of nationwide “virgin” mid band downlink spectrum, tailor-made for a bandwidth-intensive mobile video service 
  5. As consumers move to OTT video consumption, DISH’s spectrum portfolio allows it to create a OTT/mobile video product as a defense against cord-cutting
  6. Ergen believes he can build a mobile video business worth in excess of $40B
  7. At a $40B spectrum valuation, DISH is worth $90 today. This is a baseline fair value.
  • Mobile Data Traffic (MDT) tsunami
  1. With the introduction of the iPhone, Apple single-handedly transformed the North American wireless network supply/demand equation
  2. MDT is hugely bandwidth intensive, and the rapid adoption of smartphones has strained operator networks
  3. For reference, a 4G smartphone utilizes 300X the bandwidth a voice/text-only basic phone does
  4. According to network capacity expert AGT, mobile networks are currently running at dangerously “hot” levels – upwards of 60%, when safer levels are closer to between 40% and 45%
  5. Cisco projects MDT in North America will grow more than 50% per annum thru 2019; for industry leader Verizon, that is the equivalent of adding 600MM subscribers to its current 100MM sub base
  6. Simply put, the North American wireless network supply/demand equation is out of balance; and Charlie Ergen knows it…
  • DISH: the wireless kingmaker
  1. Spectrum bands are broken down into low (< 1000 MHz) mid (1000 to 2300) and high (>2300)
  2. Low-band considered “beach front” quality due to favorable propagation characteristics (projects wireless signal thru concrete walls)
  3. For the Big 2, additional low-band capacity is at best a remote possibility, with Broadcast spectrum available by 2018 at the earliest, and the FCC likely to tip the scales in favor of S and TMO for the Broadcast auction
  4. The next best option to low-band spectrum is mid-band spectrum,  which pairs well with the low band “LTE” networks currently in place via technology called “supplemental downlink”
  5. At the recent AWS-3 auction, mid band downlink spectrum sold for an implied valuation of over $3.50 per MHz-POP, well in excess of all “expert” predictions…Ergen predicted this outcome months before on DISH earnings calls
  6. The Big 2 believe auction valuations got out of hand due to DISH involvement, and going forward will focus on technological alternatives to spectrum in order to build out capacity
  7. For good reason, the Big 2 are not likely to talk up DISH’s stock price; but they know they need DISH – the math simply does not add up
  8. At the auction-implied valuation, DISH is worth $130 today. This is a base case fair value.
  • “Heads DISH wins, tails the Big 2 lose”
  1. Post AWS-3 auction, Ergen said DISH has upwards of “a dozen” options on the table for commercializing its spectrum portfolio
  2. Even if Ergen is 50% off, that’s likely 3 or 4 options that do not involve the Big 2; I do not believe the Big 2 can afford to lose access to DISH spectrum…
  3. As such, as soon as DISH moves in a non-Big 2 direction, I believe a bidding war ensues
  4. At $4.50 per MHz-POP, DISH is worth almost $160 per share. This is a bull case fair value.
  • Comcast
  1. With the CMCSA/TWC deal off the table, CMCSA is looking for its next big deal
  2. With the inability to expand its fixed broadband footprint due to the regulatory regime, CMCSA can either expand overseas or into the wireless arena here at home
  3. While seemingly a long shot at this point, an acquisition of DISH would make sense, as a wireless broadband product would be a logical pairing with CMCSA’s expansive WiFi footprint
  4. Due to CMCSA’s size, balance sheet capacity and the nature synergies between video products, I believe the Big 2 would potentially panic in the event CMCSA bids for DISH
  5. At $5 per MHz-POP, DISH is worth $200 per share. This is a super bull case fair value.
  • Risk/reward
  1. Current valuation implies a spectrum value per MHz-POP of only $1.50. Based on the public market value of DISH’s spectrum, the current implied valuation creates favorable downside protection
  2. The convergence of a favorable M&A environment, explosive MDT growth, the virtuous cycle of the Big 2’s network effect (the better the network, the more people want to join; and the more people that join, the greater the capacity strain), and the recent CMCSA/TWC deal collapse has the potential to accelerate the closure of the gap between price and FV, thus enhancing the IRR profile of the investment

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