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.”
Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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