DISH Plans $4 Billion Sale of Senior Secured Notes


By: Mary Jander

DISH has unveiled a plan to offer approximately $4 billion in senior secured notes via its cable TV subsidiary DISH DBS to, according to a press release, “finance the potential purchase of wireless spectrum licenses and for general corporate purposes, including the buildout of wireless infrastructure.”

The move is the latest in a series of news items highlighting the ongoing progress at DISH in the buildout of its 5G network, which is set to go live in Las Vegas in the first quarter of next year. It also raises questions about the status of DISH’s overall 5G plan.

DISH Seems to Be On Track for 5G

DISH is mandated by a 2019 agreement made with the U.S. Department of Justice as part of the $26.5 billion Sprint/T-Mobile merger to cover 20% of the U.S. population with its 5G services by June 14, 2022, and at least 50% by June 2023. The arrangement is aimed at making DISH the fourth largest wireless provider in the U.S., supplanting Sprint behind AT&T (NYSE: T), Verizon (NYSE: VZ), and T-Mobile US (Nasdaq: TMUS).

The Las Vegas rollout was delayed by problems getting the radio software and core network software to work together, according to DISH management. There also are issues related to working with T-Mobile on roaming. (Recall that DISH and T-Mobile have fallen out over several issues during past year.) Still, within the next 90 days, DISH plans to continue testing the Las Vegas network in preparation for first-quarter 2022 rollout.

More is on the way, DISH says. During the latest earnings call last week, Dave Mayo, EVP network development at DISH, boasted that plans are going well to meet not just the 20% deadline for 2022 but an original 70% deadline by June 2023:

“[W]e're making great strides and great progress around the leasing and permitting activities associated with the 70% milestone for 2023. And as it relates to the 20% threshold or POP requirement for 2022 … we started 35 markets when we filed … [and] at the end of the quarter, we're now up to 42 markets that have construction activity. And as it relates to the sites that are required to meet the '22 obligation, we have building permits on 2/3 of them, which I feel really good about that.”

How DISH Is Addressing Obstacles

As DISH rolls out its 5G network, it’s becoming clearer how the company plans to deal with fierce competition from the top three U.S. carriers. For instance, DISH will make private wireless networking for enterprise customers a priority, thanks to the latency and edge efficiencies DISH can offer via its deal with Amazon Web Services, announced last April. This approach was highlighted by Stephen Bye, EVP and chief commercial officer at DISH, on last week’s earnings call:

“And so with our platform, we do have some capabilities in that environment with the cloud-native architecture that we're deploying that gives us the opportunity to differentiate more and actually provides more degrees of freedom for an enterprise customer as well than what you would have with a traditional network.”

DISH is also looking at the potential to wholesale some of its considerable stable of non-C-band wireless spectrum, perhaps in order to help fund its 5G buildout. One factor in DISH’s favor: Last week, AT&T and Verizon said they’d delay a planned December 5 rollout of 5G based on the C-band spectrum acquired during last year’s U.S. Federal Communications Commission’s (FCC’s) auction. The Federal Aviation Administration (FAA) maintains that services in the C-band pose a hazard to airline cockpit safety systems. The delay is tentatively set through January 5 as the FAA investigates. In the interim, AT&T and Verizon may choose to lease extra spectrum from DISH to make up for what they can’t yet use.

DISH Stock Hammered

Despite solid earnings, the market has punished DISH since last week for the Las Vegas delay. Also, as DISH continues to roll out its 5G network in the 42 cities it’s earmarked for service next year, the company will have to increase its quarterly rate of capex, at least for a few quarters. As of this writing, shares were trading at $37.58, representing a decrease of -4.81 (-11.36%) over the past 5 days.

For 3Q2021, DISH reported revenue of $557 million, up 10% year-over-year. Total revenue for the first three quarters of 2021 was $13.43 billion, up 23% over the same period last year. Net income for the nine-month period was $1.86 billion, over 80% over the same period last year. Diluted earnings per share were $2.93 for the first nine months of 2021, compared with $1.77 during the same period last year.