Charlie Ergen, Dish Network Chairman, made a $2 billion bid 5/15 for radio frequencies from Reston, VA-based LightSquared, the bankrupt wireless-broadband company owned by Philip Falcone’s hedge-fund firm, according to a Bloomberg story.
Ergen made the stalking-horse bid, even though the FCC has yet to approve its use. LightSquared filed for bankruptcy last year after regulators blocked approval to build its network on concern it would interfere with GPS signals.
LightSquared and Sprint have a history together. Sprint had a network-sharing agreement with Falcone’s company before canceling it last year after LightSquared failed to get government approval for its network. LightSquared filed for bankruptcy protection two months later.
Late last year, Dish received permission from the FCC to set up a wireless service that could compete with Verizon Wireless and AT&T. It first asked for approval in 8/11 after paying about $3 billion for airwaves from bankrupt satellite companies DBSD North America and TerreStar Networks.
Earlier this month former FCC Chairman Julius Genachowski said he expected LightSquared to eventually win approval to use its airwaves. The company has looked into possible swaps of frequencies for cleaner airwaves and tighter enforcement of signal parameters in GPS devices, Genachowski said.
Noted Marci Ryvicker, Senior Analyst at Wells Fargo Securities:
“Recall that LightSquared has been embroiled in a battle with the FCC after a 2011 report found that terrestrial operations on much of its spectrum would interfere with GPS devices. In addition, there are potential issues with Mexico potentially “reclaiming” some L-Band spectrum which would come from LightSquared (given a prior agreement with Inmarsat). That said, we certainly believe there are solutions and that this spectrum still contains value.
Most recently, LightSquared has offered to “swap” 5MHz of its spectrum with the government to allow for a 10MHz band to be used. Alternatively, we believe it is possible that when combined with other spectrum assets (i.e. DISH’s AWS-4 2.0GHz spectrum), that LightSquared’s spectrum could become usable without GPS interference (at some point in time). To us, one of the most poignant statements illustrating the value in LightSquared’s spectrum came from Chairman Genchowski in May when he stated: “[the L-Band spectrum] is too valuable to be left unused”.
BOTTOM LINE: We have been asked why Charlie might possibly be buying LightSquared spectrum – our view is that this fits his strategy of acquiring assets that are likely to appreciate in value over time at a very inexpensive price.”
RBR-TVBR observation: Getting the frequencies would dovetail with Ergen’s current $25.5 billion offer for Sprint Nextel. Ergen’s goal is for Dish to sell voice and Internet services to complement its TV offering—and likely include a video streaming service in the TV Everywhere arena. Adding frequencies down the road would only make the future services more robust—and hopefully improve Sprint’s current spotty service, in our humble opinion as Sprint subscribers.
