Dish Network shares were up more than 3% in early trading Monday after influential media analyst Craig Moffett raised his rating on the stock from “sell” to “neutral” and upping his 12-month price target on the stock to $40 from $15, adding that its recent MVNO deal with AT&T erases the biggest overhang on the shares.
In a research note Monday (July 26), Moffett said the biggest weight on Dish stock had been the 2027 expiration of its MVNO deal with T-Mobile, a deadline that the analyst had said previously would make it difficult for the satellite TV pioneer to build out the remainder of its network after that date. But the AT&T agreement, which is essentially for 12 years, pushes that MVNO agreement out to 2033, giving the company the ability to be a hybrid Mobile Network Operator/MVNO “indefinitely.”
Dish has said it will launch its first 5G wireless market -- Las Vegas -- in the third quarter. In June it launched a website -- Project Gene5is -- that will provide consumers updated information on the launch and possibly gauge interest in the service in markets outside of Las Vegas.
“Now, with the stroke of a pen, all those rakes are off the table,” Moffett wrote. “Dish is virtually assured a path to viability.”
Dish shares responded accordingly, rising as high as $43.41 each (up $1.73, or 4.2%) in early trading July 26. The shares were trading at $43.10 (up 3.4%) at 10:50 a.m. on Monday.
Moffett has been a critic, along with several other analysts, concerning Dish’s wireless prospects, saying in reports several years ago that the company’s claims it could build a nationwide wireless network for $10 billion was dangerously low.
Moffett still harbors those fears. In the most recent report he noted that the AT&T deal won’t help the build out at all (Dish is required by federal mandate to make its network available to 70% of the country by 2023) and he estimated that its $10 billion price tag is still incredibly low. But the AT&T deal removed the worst-case scenario from the table, he added.
But making the wireless business easier for Dish doesn’t necessarily bode well for the remaining wireless players. Although Dish will pay AT&T about 4% billion over the life of the MVNO deal, it also allows the satellite company to pick and choose which markets it will build out itself -- most likely the denser, more profitable ones -- and leave the more sparsely populated areas to AT&T.
“Good news for Dish is bad news for the industry,” Moffett wrote. “We are incrementally more bearish about AT&T and Verizon, and less bullish about T-Mobile, than we were before.”
Michael Farrell is senior content producer — finance.
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