DISH has made a new all-time high in today’s session, rising above the $73.14 high from March 2000, though the stock has not exactly blasted through that level just yet:
The excitement over DISH shares in the past month coincides with the wireless spectrum auction taking place in November. CNET had a terrific article last month discussing the details of the auction, what it means, why it matters, etc. In any case, the auction bidding started on Nov. 13th, and the early results suggest that wireless companies are paying the government much more than expected for the spectrum on auction. It just so happens that DISH owns a large amount of spectrum itself, as detailed by the CNET piece:
Verizon Wireless, AT&T and T-Mobile are likely to buy up the bulk of available spectrum.
Another wild card is satellite-TV provider Dish Network, which has been steadily building up a war chest of spectrum. It’s unclear what Dish has planned with its wireless spectrum holding, but Lowenstein believes the company will eventually offer a fixed-mobile service as an alternative to DSL or cable to consumers in parts of the country that lack significant broadband infrastructure in the ground.
The results of the auction will not be released until all rounds of bidding are completed, which could last into next month. However, it’s an interesting situation for DISH, as investors today are buying the shares based on the perceived increase in value of the company’s existing spectrum assets. Analysts are extrapolating the recent results of the auction out over the next few weeks based on the similar auction bidding patterns from the last auction in 2008.
At the moment, DISH has not monetized those spectrum assets, as management mentioned in its most recent quarterly release:
We have invested over $5 billion since 2008 to acquire certain wireless spectrum licenses and related assets. We may also determine that additional wireless spectrum licenses may be required to commercialize our wireless business and to compete with other wireless service providers. We will need to make significant additional investments or partner with others to, among other things, commercialize, build-out, and integrate our licenses and related assets, and any additional acquired licenses and related assets; and comply with regulations applicable to our licenses.
Here is a breakdown of the company’s spectrum assets:
I am not a telecommunications engineer, so I don’t understand the technical implications of these varying spectrum licenses. In addition, management has made it clear that DISH might not be able to monetize those licenses in the full fashion, whether through development or partnership. However, it’s obvious from the price action in DISH in the past two days that investors have all of a sudden placed a much higher value on those licenses based on the current auction bids. Here is the daily chart for DISH:
While the technical breakout is clear, getting a handle on the fundamental situation in DISH is much more difficult. The stock is not being valued on its earnings power, but rather on the net asset value of the spectrum licenses that it currently owns plus the value of the broadcasting business. This is not a situation for the feint of heart.