Satellite pay-TV service provider DISN Network Corp. (DISH - Analyst Report) recently received a shot on its arm as Standard & Poor's Ratings Services (S&P) raised its outlook on the company from Stable to Positive. The reason for this upgrade was the proposed wireless network strategy of DISH Network. At present, S&P rates DISH Network at BB-, which is still three notches below the investment grade territory of the rating agency.
Earlier this year, DISH Network acquired 40 MHz S-band wireless spectrums through acquisitions of TerreStar Networks Inc. and DBSD North America Inc. Additionally, the company itself owns a slot of in-high-demand 700 MHz wireless frequency. DISH network has decided to deploy a nationwide ground based 4G LTE wireless network using the satellite airwaves.
According, management applied to the Federal Communications Commission (FCC) a waiver for a mobile phone and wireless broadband network. The FCC, however, delayed its decision suggesting that the regulatory agency is in process of rulemaking and the final decision will be taken once the rule will be finalized. Nevertheless, the FCC further hinted that it is strategically in favor of freeing different airwaves for mobile phone and Internet network to support the massive spurt of wireless data growth.
An approval from FCC will place DISH Network head on with large cable TV operators, such as Comcast Corp. (CMCSA - Analyst Report) and Time Warner Cable Inc. (TWC - Analyst Report) and large telecom operators, such as AT&T Inc. (T - Analyst Report) and Verizon Communications Inc. (VZ - Analyst Report). All these MSos offer triple-play bundled TV, Internet, and telephony services. S&P stated that the rating agency may upgrade the credit rating of DISH Network within a year if the company’s wireless venture moves forward without deteriorating its balance sheet. At the end of 2011, the company had approximately 5,453 million of debt outstanding.
Furthermore, the new movies streaming services that DISH Network has started after its acquisition of Blockbuster movie chain becomes a major catalyst for the company. Management is highly optimistic about the company’s new marketing drive to promote both DISH Network and Blockbuster. The new service has already started to pay rich dividends for DISH Network and we remain bullish on better subscriber growth in the upcoming quarters.