In the wake of the steady drumbeat of 5G wireless network innovations, Dish Network (DISH) shares have perished, as well as hopes for a merger with rival satellite television broadcaster DirectTV. Dish stock is running on four straight weekly earnings.
It seems that regulators will not allow Dish, the nation’s second-largest direct broadcast satellite provider, to join forces with the top satellite provider, AT&T’s (T) DirecTV, in the face of a lack of competition in rural areas. Faced with declining viewers, Dish is now going to have to figure out other ways to keep its company running.
As Dish starts throwing his weight behind 5G, Wall Street thinks he may have a chance to improve his fortunes. It will take a few years for Dish to establish a foothold in the market, but it looks good, analysts claim.
“Private networks will actually be the first significant 5G opportunity,” said Craig Moffett, analyst at MoffettNathanson. “It is likely to be a remarkably competitive market, where Dish would compete against integrators like IBM (IBM) and Accenture (ACN), equipment providers like Cisco Systems (CSCO) and Ericsson (ERIC), and cloud service providers like Amazon Web Services and Microsoft (MSFT) Azure.”
Moffett is doubtful that Dish will contend successfully against Verizon Communications (VZ), AT&T, and T-Mobile US (TMUS) in 5G wireless business networks. They have a head start on the introduction of 5G broadband networks.
Yet one of the latest features of 5G networks is that spectrum will be cut to include private communication. Enterprise technologies are expected to appear in smart factories, autonomous vehicles, robotics, remote health care and other fields. Moffett contends that Dish may try to use private 5G systems to replace Wi-Fi networks in college campuses or business campuses.
Dish Stock: No Go to Merger
In October, the Department of Justice informed DirecTV and Dish that the merger of the two satellite broadcasters would not be approved. Likewise, the proposed merger would face an uphill battle under the incoming administration of President-elect Joe Biden, analysts say.
Dish and DirecTV are unable to keep trying. For one thing, the Federal Communications Commission blocked a merger of the two in 2002.
Like DirecTV, Dish continues to lose pay-TV viewers when customers turn to on-demand video streaming. But in the September portion, Dish lost just 87,000 video clients, less than the analysts predicted. Meanwhile, Dish’s new flagship, prepaid wireless company lost 212,000 customers in the September period. Analysts expect Dish to run the company on the basis of profitability, not consumer growth.
So analysts now appear to be focusing on Dish’s success in setting up a 5G broadband network.
“There’s exactly nobody who thought a Dish-DTV merger would be bad for the stock,” Moffett said. “But I suppose it could be the case that those investors who owned Dish in hopes for a DTV deal needed to get washed out before the stock could be firmly in the hands of those who own it because they think building a 5G network is actually a good idea.”
5G Broadband and Contrast to the Japanese Rakuten
Dish stock bulls claim they will create a 5G broadband network close to the Rakuten Mobile network in Japan. Rakuten has developed a 5G network that uses low-cost, open-standard radio infrastructure and scalable cloud storage technologies.
“Rakuten is often compared to Dish, as Rakuten is a young startup challenger to the large incumbent mobile operators in Japan and also building out a fully-virtualized (radio access) network,” said Wells Fargo analyst Eric Luebchow in a recent note to clients. “But Rakuten’s recent earnings highlight some of the challenges of a startup wireless company competing against large established mobile network operators.”
Deutsche Bank analyst Bryan Kraft claims that Dish will not earn “meaningful revenue or EBITDA from 5G business services” until 2026. EBITDA applies to earnings before debt, royalties, depreciation and amortisation.
In spite of the wait, Kraft prices the purchasing of the Dish stock.
“We continue to believe that DISH is likely to create significant value over the long term by leveraging its substantial unencumbered spectrum portfolio to deploy a new greenfield 5G wireless network,” he told clients in his study. Kraft continued that Dish could “capture a modest share of a nascent, but eventually large, new market segment — 5G Enterprise, which we estimate could represent a $100 billion total addressable market in the U.S. by 2030.”
Should Dish Land Amazon be a 5G Broadband Partner?
Dish stock bulls also expect that Dish will at some point, declare a wholesale deal with the anchor tenant. Amazon.com (AMZN) has been listed as a future collaborator over the years. Dish has reportedly spoken to others such as Microsoft and Google Alphabet (GOOGL).
Dish recently announced plans to develop a 5G broadband network with Qualcomm (QCOM) and Intel (INTC) chip manufacturers, Crown Castle (CCI) cellphone tower provider, Fujitsu and others.
There’s a holdup in Dish’s 5G broadband buildup. Fujitsu will not ship a large amount of radio equipment until late 2021. Meanwhile the Crown Castle deal gives Dish access to 20,000 towers and fibre optic wiring.
Even, Dish says it plans to spend $10 billion over seven years on its 5G broadband network. This is likely to require external funding from a partner, analysts claim.
Dish Stock: 5G Broadband Regulatory Mandate
Dish’s 5G broadband network has to reach 20 per cent of the U.S. population by June 2022 in order to fulfil regulatory mandates.
Dish told analysts that it plans to introduce 5G networks on a big market in the September quarter of 2021. Dish’s 5G broadband network needs to reach 70% of the U.S. by June 2023. That’s according to regulatory agreements relevant to the purchase of radio spectrum by Dish.
Dish hired industry veterans to support the 5G broadband build-up. Dave Mayo, a former T-Mobile executive, is now Dish’s Executive Vice President for Network Growth.
In addition, Dish purchased the rights to lease T-wireless Mobile’s network when it acquired the Boost-branded wireless company on 1 July. In addition, T-Mobile and Sprint concluded their merger on 1 April. To secure regulatory clearance, they agreed to sell the Boost company to Dish and to have wholesale connectivity to the T-Mobile network.
Meanwhile the relative strength of Dish stock rose in November, but shares have not yet rebounded to pre-coronavirus emergency levels. Dish’s stock has now been consolidated, with an entry point of 37.99.