Record Prices in U.S. Airwaves Auction Bolster Dish Stock

A U.S. auction of airwaves to handle the increasing load of smartphone data is on track to be the most expensive ever, pushing Dish Network Corp.’s shares to a record and setting the stage for another spectrum sale in 2016.

Winning bids in the Federal Communications Commission auction reached $24.2 billion yesterday for the airwaves that can feed data to smartphones and tablets, the agency said in a post on its website. A 2008 offering had $19.6 billion in bids.

Dish’s current airwaves holdings may now be worth at least $20 billion, compared with $17 billion implied by the company’s stock market value Nov. 18, according to Philip Cusick, a JPMorgan Chase & Co. analyst. Yesterday’s spectrum prices also may bode well for a 2016 auction, when mobile companies can bid on airwaves voluntarily surrendered by TV broadcasters in return for payment.

“The record-breaking prices being bid in this auction are an extremely bullish sign” for 2016, said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, which represents broadcasters considering taking part in the auction.

Whether enough TV stations take part will go far to determining that sale’s success in freeing airwaves for wireless use.

The rapid rise in bids is a positive for independent spectrum owners like Dish, Cusick of JPMorgan, wrote in a research note Nov. 18.

10 Percent

Dish, run by billionaire Chairman Charlie Ergen, rose 10 percent to $74.66 at the close in New York yesterday, the highest price since the company’s initial public offering in 1995. Dish has a market value of more than $34 billion.

Ergen said in August that the auction would help set a baseline value for Dish’s spectrum holdings.

He may be working on ways to cash in on that value. Ergen said on an earnings conference call earlier this month that Dish has considered forming a separate business unit for its extensive spectrum holdings.

The AWS-3 airwaves being auctioned can help wireless companies ease network congestion and provide coverage in more areas. The added capacity can help carriers deliver more videos and music to phones and tablets with less interruption.

Companies including U.S. wireless leaders AT&T Inc. and Verizon Communications Inc., No. 4 mobile provider T-Mobile US Inc. and Dish registered with the FCC to take part in the sale that began Nov. 13.

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