Dish raises $5.25B in secured debt offering

Dish Network received a vote of confidence from bond investors – to the tune of $5.25 billion, which it raised in a secured debt offering this week. The company announced on Monday that it wanted to raise $4 billion. Net proceeds of the offering are earmarked to finance the potential purchase of wireless spectrum licenses and for general corporate purposes, including the buildout of wireless infrastructure. It’s being set up as an inter-company loan with Dish DBS.

Dish reiterated in its recent 10-Q filing with the SEC that is expects capital expenditures on the order of $10 billion for its 5G network deployment. It’s already struck tower agreements with the likes of Crown Castle, from which it will lease space on up to 20,000 communication towers, SBA Communications and American Tower.

Dish Chairman Charlie Ergen told investors during the company’s earnings conference call last week that the next big thing is November 29-December 3, when AWS has its re:Invent conference and people likely will get a chance to experience the beta network that it’s built in Las Vegas. Currently, Dish employees are using the network and providing feedback, with tests expected to continue for 90 days before a commercial launch sometime in the first quarter of 2022. That launch has been pushed backed several times already.

Dish’s spend for 3.45 GHz

Analysts at New Street Research are connecting the amount raised in Dish’s secured debt offering to what Dish is likely spending in the 3.45 GHz auction (Auction 110) that’s currently under way at the FCC. Bidding in the auction is under wraps until the auction closes and the FCC releases results, which could happen before year’s end. The New Street analysts now estimate Dish’s spend in the auction at $5.25 billion compared with their previous assumption that Dish would spend $4.9 billion in the auction. Because the auction appears to be coming in lower than they expected, or right around $22 billion versus the previously anticipated $25 billion, they’re reducing their estimates further for other bidders in the auction.

They figure $5.25 billion would get Dish about 24 MHz on average nationally, or 40 MHz across 130 million POPs, at an average price of roughly $1/MHz-POP. They reason that the more 3.45 GHz spectrum a carrier wins, the better, especially considering that it’s increasingly unclear when operators will be able to use their C-band spectrum.

In fact, as Dish was delivering its third-quarter results last week, news was emerging about AT&T and Verizon agreeing to a one-month delay on the use of their C-band spectrum as the aviation industry seeks more time to study the effects on their business. If Verizon and AT&T lose access to their C-band spectrum for an extended period of time, the value of Dish’s non-C-band spectrum will increase.

Leasing access to 3.45 GHz spectrum could be a new source of EBITDA/free cash flow for Dish that nobody anticipated, and that could help fund its network build, the analysts noted. “It will be years before Dish would need all of the 3.45 GHz portfolio and it could be a while before the C-Band issues are resolved,” wrote New Street’s Jonathan Chaplin. “Bottom line: the more of this spectrum Dish gets, the more they are worth.”