Valuable Spectrum And An Imminent 5G Launch Make Dish Stock A Buy

Dish Network stock (NASDAQ:DISH) posted a mixed set of Q3 2022 results last week as its core satellite TV business continued to lose subscribers, although its retail wireless business has shown signs of stabilizing. Revenues for the quarter fell by about 8% versus last year to $4.1 billion, missing estimates, while net income fell almost 25% to $412 million slightly ahead of estimates.

Dish’s overall Pay TV subscriber base fell by about 9% year-over-year to 10.02 million subscribers, with the more lucrative satellite TV business losing about 184,000 subscribers over the quarter, although the Sling streaming product added about 214,000 users over the quarter. Dish’s wireless business is also stabilizing, as it added 1,000 net subscribers versus a year-ago decline of 121,000 subs. Dish had a total of 8.01 million wireless subscribers as of the end of the quarter. The business had previously been losing subscribers, as T-Mobile began shutting down its CDMA network, which served many of Dish’s mobile virtual network operator (MVNO) customers. While Dish has been building out its own 5G network, it said that it would delay the launch of its Boost Infinite postpaid mobile service from the previously planned timeline of Q4 2022 to Q1 2023, due to specific operational issues.

Dish stock has declined by close to 13% since earnings were published, currently trading at about $13.50 per share due to the weak revenues and delayed postpaid wireless launch. The stock also remains down by about 60% year-to-date. We are cutting our price estimate for Dish from $27 per share to $21 per share, due to the headwinds including rising rates and pressure to profitability in the near term. However, our price estimate is still about 55% ahead of the current market price.  See our analysis on Dish Network Valuation: Expensive Or Cheap for more details. We think Dish’s valuation could be supported by its upside potential from its 5G wireless launch. Moreover, Dish’s massive spectrum holdings should also provide a backstop for the stock. The company holds around 150 MHz of value sub-6 GHz frequency, compared to Verizon and AT&T which own around 290 MHz each, per UBS. Although regulations prevent existing wireless carriers from buying Dish’s spectrum assets before 2026, the spectrum is nevertheless increasingly valuable given the growing demand for bandwidth, the higher spectrum intensity of 5G versus earlier technologies, and also due to the limited availability of airwaves.

[1] Month-to-date and year-to-date as of 11/6/2022
[2] Cumulative total returns since the end of 2016