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DISH Attractive Despite Losing Clearwire, Macquarie Says

Stocks in this article: DISH S CLWR T VZ TMUS DTV GOOG

NEW YORK ( TheStreet) - Dish's technological assets lead Macquarie analysts to expect the telecom company to outperform as it attracts competitors. DISH was climbed 2.3% to $42.37 in mid-day trading.

The Englewood, CO-based company announced Wednesday that it was no longer interested in purchasing all outstanding Class A Common Stock of Clearwire Corporation (CLWR). DISH had offered $4.40 a share but was outbid by Sprint, whom was willing to pay $5 per Class A stock.

The pursuit of Clearwire was an attempt by DISH Chairman and founder to expand from satellite television and into wireless. Telecom companies have been engaging in mergers and acquisitions more recently to address rising industry costs. Making a bid for a major U.S. mobile provider would allow the satellite company to realize their wireless goals. Macquarie analysts believe that selling to AT&T (T) would be the most prudent option.

"Recent FCC filings from Dish highlight how intertwined their spectrum assets are," the analysts wrote in a note. Dish has filled for an FCC waiver to ease buildout requirements on their 700 MHz E-Block until technical issues are rectified. The FCC has required Dish to buildout up to 35% of their operation area by the 2nd quarter. The analysts are optimistic that the FCC will compromise with Dish due to the company's delays with their S-Band waiver process and this failed acquisition.

Macquarie drew comparisons with the potential Sprint-Clearwire deal. If the acquisition is to occur without spectrum conditions it could provide incentive for AT&T too pursue Dish. The acquisition would prevent Dish from leasing its spectrum and creating pressure for AT&T's D and E-Block spectrum. "AT&T could pay ~US$60/share for Dish and the deal would still be accretive," Macquarie analysts wrote. The team, led by Amy Yong, estimate AT&T's net income for 2015 increasing by 4% and free cash flow per share rising by 6% as a result of such a deal.

While, AT&T appears optimal, Dish could make profitable arraignments with a long list of possible of partners like Verizon (VZ), T-Mobile (TMUS), DirecTv (DTV), and Google (GOOG). "Dish's portfolio of spectrum assets include 5MHz of E block spectrum giving the company a broad coverage area while its high frequency AWS-4 is well suited for urban areas, given its low propagation and greater capacity," Yong wrote. Dish's arsenal of technological assets makes them attractive to many different buyers.

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