In addition, TMF Associates identifies Dish as a major bidder in the current auction. They further speculate that, if successful, the company will spin off its spectrum assets and raise debt against them.
Thinking further about the end-game, it looks to me like the mysterious spin-off of DISH’s spectrum, mentioned briefly by Ergen in the Q3 results call, is the likely way forward if one of the DEs is successful in acquiring a large block of spectrum. DISH could inject its existing spectrum assets into this entity and raise debt against the combined spectrum portfolio. Then (given the FCC rules against selling DE spectrum for at least 5 years), DISH would have a standalone entity it could spin-off to shareholders, and could lease or all of its spectrum holdings to the major operators, just like Grain Management.
John Malone, the king of spins, recently told CNBC that Ergen(a former professional poker player) is “creative, but a poker player.” Ergen, like Malone, is a shrewd capital allocator and strategist, and whatever the outcome of the auction, this should be an interesting situation to watch.
Disclosure: The author holds no position in any stock mentioned.