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DISH Network Upgraded to Neutral

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We upgraded our recommendation on DISH Network Corp. (DISH - Free Report) to Neutral based on its strong financial results for the third quarter of 2013. Both the top line and the bottom line outpaced the respective Zacks Consensus Estimate. DISH currently carries a Zacks Rank #3 (Hold).

Why the Upgrade?

In our view, better pay-TV services, dishNET broadband services and a strong portfolio of wireless spectrum will help the company to improve its financials. DISH is gradually improving its technically superior hardware, the latest of which is a HD DVR set. This new device will enable subscribers to automatically skip advertisements for prime time TV programs.

DISH is transforming itself from a low-priced leader in the U.S. pay-TV industry to a premium service provider to reduce its subscriber churn rate. The company is concentrating its marketing efforts on higher-priced subscribers while raising the prices of its products and cutting discounts.

In the last couple of years, DISH has constructed an extensive wireless/satellite spectrum base. These precious airwaves are much coveted by wireless operators. In 2012, the company purchased 2 slots of the 40 MHz S-band wireless spectrum fromthe bankrupt TerreStar Networks Inc. and DBSD North America Inc. Moreover, the company owns a slot of 700 MHz airwaves.

DISH is one of the 34 contenders to bid for the Jan 2014 auction of PCS H Block wireless frequencies by the Fedearl Communications Commission. Furthermore, DISH also offered a bid to acquire 40 MHz of wireless spectrum held by LightSquared, which is currently bankrupt.

On Jun 17, 2013, DISH and NTELOS Holdings Corp. jointly started providing fixed- mobile broadband network to offer high-speed Internet service to areas served by NTELOS. This joint venture will reach other parts of the U.S. from early 2014.

Meanwhile, on Dec 17, 2013, DISH together with Sprint Corp. (S - Free Report) announced that the two companies have decided to jointly develop and deploy a fixed broadband network in Corpus Christi, in Texas. The network is expected to start from mid-2014 on a trial basis. If successful, then the two entities may further extend the broadband network to other areas. According to industry rumors, DISH may merge with its closest competitor DIRECTV .

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