May 11, 2022
Dish Network held its first analyst day in more than a decade this week, and used the event to provide the broad outlines of its 5G strategy.
However, investors appeared relatively uninspired. As noted by Bloomberg, Dish's shares fell to a two-year low the morning after the event – amid a broad Wall Street sell-off – having lost 33% of their value this year alone.
"Overall we found the company's targets extremely optimistic and heard varying levels of conviction in them from management – we take them more as an indication of where Dish hopes to go," wrote the financial analysts at JPMorgan Chase & Co., according to Bloomberg.
Others were slightly more positive.
"While generally light on specifics, the high-level revenue guidance should help investors conceptualize building blocks for valuing the network business and the retail consumer business (which, on simple math, puts the company at being worth well over $100 billion, in line with our thinking)," wrote the financial analysts at New Street Research.
During the event, Dish executives worked to remain positive.
"The most difficult parts of our foundation are now complete," said Dish Chairman Charlie Ergen. "I believe we passed the crux," he added, referring to the most difficult part of a climb (Ergen is an avid mountaineer).
Figure 1: Ergen spoke at the NATE trade show in Las Vegas in February 2022.
(Source: Light Reading)
Here are four broad takeaways from the event:
1. The network is cheap and potentially transformative.
Dish's network architect, Marc Rouanne, said he left Nokia in order to build the kind of network he thought the equipment vendor ought to develop. Broadly, Rouanne said Dish's network will offer far more flexibility, reliability and security than any other wireless network, mainly because it's based almost entirely on open RAN software running in the Amazon and VMware clouds.
Indeed, Dish officials reiterated during the event that they plan to spend a total of $10 billion building a nationwide network. That, coupled with the company's cumulative $30 billion in spectrum purchases, equates to a network that costs $0.82 per MHz-POP. (The per MHz-POP calculation is applied to most spectrum transactions and reflects the number of people covered compared with the amount of spectrum available, though it can be affected by a wide variety of factors.)
"The other carriers spend more than that just to acquire spectrum (and then much more to build the network)," noted the New Street analysts.
Rouanne also called out a handful of key Dish vendors: IBM as "the brain" of the network, Oracle as providing the intelligence, and Mavenir as controlling the radios.
Finally, Dish officials hinted that the operator expects to meet its US government-mandated coverage targets. But they suggested the company may only extend its network into rural areas, or inside large buildings, if it found an economic reason to do so. Otherwise, they said Dish would rely on its roaming agreements with T-Mobile and AT&T for that kind of coverage.
2. Dish has ambitious targets in the retail sector.
Stephen Stokols, the Dish executive in charge of the company's Boost Mobile brand, said the company expects to eventually raise its mobile customer base from around 8 million today to between 30 million and 40 million in the future.
To do so, he said Dish is building a digital customer management platform and is working to move customers onto that platform. He also said the company hopes to leverage eSIM technology, which could allow mobile customers to switch carriers with the press of a button. And he said Dish's 5G network will allow Boost to offer extremely inexpensive services as it rolls out across the country.
"You're going to see us move from competitive pricing to aggressive pricing to disruptive pricing," he said.
But he suggested Boost would be innovative in other areas as well: "Imagine if you could turn your unused data into a real digital currency," he said. Those comments dovetail with statements from other Dish executives regarding the inclusion of cryptocurrency and blockchain technologies into Dish's offerings.
Stokols also reiterated his plans to launch postpaid Boost services in the fall with the "Boost Infinite" brand.
Some analysts expressed pessimism regarding Dish's plans to gain up to 40 million retail subscribers.
"We are skeptical on the consumer target (for context the Dish target equates to ~1 million adds per quarter for the next 8-10 years) as it lacks a notable brand presence, a nationwide network (still relying on the AT&T/T-Mobile roaming, two legacy networks they just rebuffed all afternoon), and limited distribution (while the pandemic admittedly accelerated digital sales, the US still loves purchasing phones in person)," wrote the financial analysts at Cowen.
3. In the enterprise sector, Dish has big hopes for private wireless.
But perhaps the most lengthy presentation during Dish's analyst event came from Stephen Bye, the Dish executive in charge of selling the company's 5G network. He spoke at length about how Dish might generate 5G sales among enterprise customers.
Bye explained that Dish is building an Application Programming Interface (API) into its network that will allow enterprise customers to easily adjust their use of the network based on a wide variety of factors ranging from speed to latency. And that, he said, will allow Dish to meet enterprise customers' strict service level agreements (SLAs) in ways that incumbent carriers like AT&T and Verizon cannot. He said Dish ultimately hopes to interact with its enterprise customers on a per-transaction basis rather than via the standard method of selling them lines of smartphone services.
"This is a CIO's dream," he said.
But Bye explained that private wireless networks represent Dish's biggest enterprise opportunity. He said Dish expects that market to grow to $30 billion by 2025, and he said Dish ought to eventually capture a 20% share there.
Bye said that Dish sees the private wireless networking opportunity covering three levels. The first level involves a simple spectrum-leasing set up – in that regard, Dish could be competing with other spectrum-leasing companies like Ligado, Anterix and Select Spectrum. Bye said the next level would involve Dish providing some network-design services like RF planning. And the third and final level would involve Dish providing spectrum, network management and a dedicated "slice" of its broader, commercial network.
Bye said Dish is already registering customers in the enterprise space, pointing to the company's recent announcement with Duke University.
4. Now it's time to execute.
"This team is pumped," John Swieringa, the president and COO of Dish Wireless, said during the event. But he acknowledged that "it's just the beginning of the race."
"Now it's execution time," agreed the Cowen analysts, though they noted Dish's repeated launch delays make that "dicey."
Ultimately, Dish hosted an analyst day in order to show investors that its 5G network design works, and that the company is serious about building a network covering most Americans.
Now, though, the company must make money from the endeavor.
In the retail space, it's unclear whether Dish's Boost will be able to compete with heavyweights like Comcast and T-Mobile. "We look forward to more details on pricing and specific go to market strategies," wrote the financial analysts at Raymond James.
And on the enterprise side, Bye said Dish does not plan to hire its own sales force. Instead, the company plans to hit the market through its partners, and he specifically called out Cisco and Dell. He did not mention Amazon, which is noteworthy considering years of rumors of a possible tie-up between Dish and Amazon.
"So, we look forward to additional announcements in the future, especially around Dish's relationship with Amazon, as Dish has previously stated Amazon could be Dish's largest customer and Dish could be the largest customer on Amazon Web Services," noted the Raymond James analysts.
Dish officials also reiterated the company's need for more money starting next year. Ergen said the company has a $1.5 billion bond due in March.
Nonetheless, Ergen ended the event with an analogy using the Monopoly board game. He said the company's vast spectrum holdings eventually will be valuable as more and more data goes mobile. "You buy enough properties, soon enough, every roll someone is landing on your property," he said.
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