Wednesday, 19 Octorber 2011

Pointing to moves that suggest Dish Network will launch a wireless broadband service that could compete with cable operators and other high-speed Internet service providers, Moody's Investors Service upgraded its ratings on the satellite provider's debt Monday.

"Dish is in the midst of planning a long term strategy to provide wireless broadband to its customers to remain competitive with the popular triple-play product offering by the cable TV and telco industries. In our view, the company's purchase of a significant amount of wireless spectrum is an important strategic step which is factored into the rating," Moody's wrote in its report.

Dish has invested heavily on wireless spectrum, shelling out $2.78 billion to buy S-Band spectrum from DBSD North America and TerreStar Networks.  While founder Charlie Ergen and other Dish executives have said little publicly about their plans for the broadband spectrum, Dish told the FCC in September that it wants to build a hybrid network based on LTE-Advanced technology. Industry observers also expect that Dish could use its acquisition of Blockbuster Entertainment to market streaming video services to subscribers through a wireless broadband network.

Moody's upgraded Dish's corporate rating to a Ba2 from a Ba3 rating, noting that its recent acquisitions have been a better use of cash flow. "We expect the company to invest in a broadband strategy over the intermediate term and believe that given its strong credit metrics for a Ba2 rating category, it has sufficient flexibility via its free cash flows and balance sheet capacity to make measured investments and raise incremental debt for such investments," Moody's senior VP Neil Begley wrote in his research note.