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DISH Network Corp.’s (DISH - Analyst Report) objective to set up its own terrestrial wireless network seems a distant possibility as it has recently annulled its plan to acquire bankrupt wireless broadband company, LightSquared Inc. DISH is the second largest satellite TV operator in the U.S. after DIRECTV (DTV - Analyst Report).

In May 2013, DISH offered $2.22 billion to acquire 40 MHz of wireless spectrum held by LightSquared. However, Harbinger Capital Partners, the principal owner of LightSquared, rejected this bid stating that DISH had resorted to fraudulent means to enter the bidding process. As a result has decided to invest nearly $4 billion in LightSquared for further restructuring of the company.

In Oct 2013, a Manhattan bankruptcy judge approved DISH’s bid and had set an auction date on Nov 25, 2013. Earlier, the Federal Communications Commission (FCC) had refused the use of this particular airwave as it was interfering with the global positioning system. This had led to LightSquared’s bankruptcy. Later on, the FCC conducted more tests on the spectrum and eventually permitted an auction with a few modifications.

DISH Network has been holding 40 MHz of unused satellite spectrum for the last two years in its portfolio along with the FCC backing. We believe that the company’s attempt to enter the wireless market is a diversification strategy to counter stiff competition arising from low-cost video streaming companies like Netflix, Inc. (NFLX - Analyst Report) and Hulu.

However, to set up wireless network without any wireless partner will be an extremely difficult task as it requires huge investment and marketing support. Moreover, 40 MHz of spectrum is not enough to cover the entire footprint.

Earlier, DISH Network also failed to acquire both Sprint Corp. (S - Analyst Report) and its subsidiary Clearwire. Such deal failures will not only delay the company’s wireless deployment goals but will also result in subscriber loss going forward.

Currently, DISH Network carries a Zacks Rank #3 (Hold).

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