Dish Analyst Downgrades Stock After Broad Denials Of Amazon Prime Wireless Deal

Benchmark analyst Matthew Harrigan downgraded DISH Network Corp DISH from Buy to Hold.

The last $37 price target and fair valuation estimation included a 5G O-RAN network model through 2031. 

Last week's stock action off a flurry of media reports suggesting Dish could partner with Amazon.Com, Inc AMZN to offer wireless to Prime customers at nominal pricing or free indicates Dish's network potential. 

Like other telecom and TMT companies, Dish uses AWS for cloud services. However, Dish lacks the national reach and demonstratable QoS to appeal to Amazon for an immediate Prime customer wireless offering. 

Dish would also lack the requisite ability to resell MVNO service from AT&T to offer national coverage. 

The economics of supplying mobile, even attaching credence to Dish's supposed superior network economics, would substantially exceed the annual $139 price for an Amazon Prime subscription. 

Entering the mobile market would also exacerbate unwelcome regulatory scrutiny in Washington. 

However, Harrigan was highly skeptical of any immediate initiative even before denials from Amazon and the large MNOs. 

Dish remains vital to Samsung Electronics Co, Ltd SSNLF regarding its U.S. wireless infrastructure ambitions, especially for O-RAN. However, Samsung continues to work with larger carriers for open RAN trials. 

Fair value in the mid or high 30s is still tenable in his estimation through the recovery of Dish's $30 billion+ spectrum investment (while aspirational) through successful commercialization via its cloud-based open RAN and VoNR network architecture. 

Dish will satisfy FCC requirements for its 600 MHz licenses reaching 70% of the U.S. this month and is working to address liquidity concerns, including most imminently a $1 billion 2024 convertible maturity even as it cannot currently access the straight debt market at satisfactory rates despite being "asset rich." 

Management remains opaque regarding clarity on addressing liquidity concerns. However, it maintains it can back out of its $3.5 billion purchase of Sprint Spectrum from T-Mobile US, Inc TMUS with only $72 million in payments.

Price Action: DISH shares traded higher by 5.35% at $7.48 on the last check Tuesday.

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