Could Ergen use DISH to move on Inmarsat?

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EchoStar last week decided to walk away from its pursuit of Inmarsat having tried a £5.32 per share bid. EchoStar now cannot re-bid for the next six months unless invited to do so by Inmarsat.

However, Sami Kassab, an equity analyst at investment bank Exane/BNPP suggests an alternate scenario, and asks whether Charlie Ergen, founder and chairman of EchoStar, might use his other business, the giant DTH pay-TV operator Dish Network to make a bid.

The bank says: “We believe [Ergen’s] interest goes beyond the strategic fit with EchoStar. It includes the benefit for Dish – the sister company of EchoStar – of owning the spectrum Inmarsat licenses to Ligado, a competitor it tried to acquire five years ago. In Dish’s Q1 18 conference call, Ergen mentioned that he ‘did not exclude merging EchoStar and Dish’. The [stock exchange] rules do not apply to Dish.”

The bank warns that Inmarsat bid speculation is likely to continue.

The attraction for Ergen (with either an EchoStar or Dish responsibility) is that Inmarsat has valuable spectrum rights in its portfolio. The bank states: “Ligado’s FCC filing at the end of May coupled with Echostar’s interest has led us to revise our views. Assuming USD0.12 per Mhz-POP, we now assume its spectrum could be worth 260p per share, implying an 8 per cent yield on the Ligado contract. Given the remaining uncertainties on Ligado’s ability to monetise that spectrum, we have only included 50 per cent of that value in our target price.”

Ligado networks (perhaps better known as LightSquared) is a privately-held US-based satellite communications company developing a satellite-terrestrial network to support 5G and Internet of Things applications in North America. It already operates the Sky Terra satellites.


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