(DISH) DISH Network Bags TerreStar

DISH Network Corp. (DISH), the second largest satellite TV operator in the U.S., yesterday received court approval to acquire currently bankrupt TerreStar Networks Inc., which offers wireless services over a satellite network. TerreStar was up for sale after it filed for bankruptcy protection in last October with more than $1 billion in debt. Earlier this month, DISH Network has made a cash offer of $1.375 billion for TerreStar.

On June 21, 2011, the U.S. bankruptcy court in Manhattan has announced DISH Network as the “Stalking Horse” bidder for TerreStar to open the bidding process. The company was expected to compete with a group of senior debt holder of TerreStar and wireless operator MetroPCS Communications Inc. (PCS). The deadline to offer bid for TerreStar was June 27, 2011. However, any competing offer had to start at $55.5 million higher than that of DISH Network’s offer.

Interesting, during the close of the bid period for TerreStar, DISH Network remains the sole bidder. TerreStar cancelled the bankruptcy auction scheduled to be held on June 30, since no single bid came during that period. Terrestar become the third major acquisition of DISH Network in 2011 after its $1.4 billion acquisition of DBSD North America Inc. in March and $320.6 million acquisition of movie and video game retailer Blockbuster Inc.

We believe DISH Network is trying hard to be the storage medium for the valuable wireless spectrum that can be used to grow a viable pay-TV distribution network or can transform the company to a wireless service provider. TerreStar owns around 20 MHz of wireless spectrum and is currently working on a project to launch world’s first satellite smartphone.

Earlier, the acquisition of DBSD provides DISH Network an extremely valuable spectrum for both wireless and wireline communications. Additionally, DISH Network itself owns a slot of highly demanded 700 MHz wireless frequency, which is generally used for 4G LTE network.Using these slots of airwaves, the company can form a formidable video-on-demand service over a wireless network of mobile handsets such as smartphones and tablets.

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METROPCS COMMUN (PCS): Free Stock Analysis Report

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