Can the Amazon Partnership Put DISH Network Back on Track?

Key Points

• Satellite broadband provider Dish Network has partnered with Amazon to sell its Boost Infinite post-paid wireless service to Prime members.
• Prime members get a $5 discount on the Boost Infinite $25 SIM kit and $25 off the first bill. This is not a new $25 deal, as DISH has been promoting the plan for nearly a year, just not through Prime.
• Boost Infinite doesn’t solely use the DISH network but also AT&T and T-Mobile networks.
• DISH met FCC requirements to build its 5G network to cover 70% of the U.S. population and 15,000 cellular sites. It plans to complete its smart network buildout by 2025 for $10 billion.
• DISH has over $22 billion in long-term debt.
• DISH has a $5.69 cash flow per share.
• DISH Network shares trade at 6.9X forward earnings with a 22.31% short interest.

Satellite TV and wireless provider DISH Network Co. NASDAQ: DISH stock surged higher on news of a partnership to sell mobile services to Amazon Prime members. DISH is one of the few mainstream satellite TV and broadband providers. Its niche is providing broadband services to rural, underserved and last-mile communities where the large carriers can't or haven't installed cable and fiber optic networks.

It operates 15 geosynchronous orbiting satellites, which provide internet and TV services to 98% of the country. It has been building out its 5G network and met the stipulations of over 70% of the nation being covered by June 2023. However, it still needs more buildout to compete with the likes of the major carriers like Verizon Communications Inc. NYSE: VZ or  AT &T Inc. NYSE: T and T-Mobile US Inc. NASDAQ: TMUS.

Why Wireless?

To diversify revenue streams like Comcast Co. NASDAQ: CMCSA rolling out its mobile service Xfinity, Dish entered the mobile market with its $1.4 billion acquisition of prepaid wireless service Boost Mobile. Dish acquired Boost Mobile as a stipulation for approving the $26 billion Sprint and T-Mobile USA merger by the U.S. Department of Justice, various state attorney generals and the FCC. One of the main conditions was the divestiture of certain businesses to appease antitrust concerns.

This opened the door for Dish to acquire Boost Mobile from Sprint before its merger.

FCC Requirement and

The FCC also required that DISH build its 5G network to reach at least 70% of the U.S. by June 2023. DISH accomplished the requirement by the skin of its teeth by spending upwards of $4.4 billion. DISH spent over $5 billion to acquire Sprint's prepaid customers and 800 MHz spectrum and network buildout covering 70% of the U.S. population and 15,000 cellular sites by June 2023.   

It expects to spend over $10 billion to build out its high-speed 5G network by 2025 completely. DISH has a concerning $22 billion in debt.

5G Buildout Plans

It also claims to build the smartest 5G network using open RAN technology, which is more flexible and scalable than conventional wireless networks. Open RAN allows for new features to be easily added to the network. It uses a combination of small cells, macro cells and millimeter wave technology for its network buildout.

It utilizes artificial intelligence (AI) power optimization through the cloud to adjust settings to changing conditions and scale as needed. DISH Network's portfolio includes streaming platform Sling TV, prepaid cellphone service Boost Mobile, Dish Wireless and DISH TV

Earlier Stumbles

DISH has had a rocky trajectory in 2023 due to several stumbles. Dish COO abruptly resigned on June 23, 2023, effective immediately that day. This was disclosed quietly in an SEC filing. This got investors nervous, speculating why the sudden departure. On July 6, 2023, speculation arose about the possibility of a merger between DISH Network and EchoStar NASDAQ: SATS to stave off the steadily falling decline in the satellite TV segment.

The rumors sent DISH shares lower. DISH’s satellite TV and internet customer base has been cut nearly in half from 14.1 million in 2013 to 7.1 million DISH TV customers in 2023. This has been reflected in its stock price falling from a high of $81 in 2015 to a low of $5.94 on May 12, 2023.

Amazon Prime Deal

The announcement of a partnership with Amazon.com Inc. NASDAQ: AMZN came at the right time as shares spiked on the news. Specifically, Amazon will offer DISH’s Boost Unlimited prepaid mobile plan with a $5 discount and $25 off the first month’s bill for $25. While this sounds promising, the $25 unlimited plan is a familiar service, as DISH has already been promoting the plan for nearly a year.

The Amazon partnership is meant to attract more people to DISH than it wouldn't have reached before. The kicker is that DISH may end us losing money on the deal in exchange for adding new subscribers since the service mostly utilizes T-Mobile and AT8T broadband networks. Financial terms of the deal weren't disclosed.

DISH Network analyst ratings and price targets can be found at MarketBeat.

Daily Cup and Handle Breakout Attempt

The daily candlestick chart on DISH appears to form a cup and handle breakout. The cup lip line commenced at $7.84 in June 2023, as shares fell to a low of $5.83.

DISH formed a rounding bottom and rallied through the daily market structure low (MSL) trigger at $7.00 to retest the $7.84 lip line spiking to up $8.44 before falling back down to $6.95 to form the handle as it coiled back to retest the lip line again for the third breakout attempt.

The daily relative strength index (RSI) bounced off the 50-band as it rose through the 60-band. Pullback support levels are $7.23, $7.00 daily MSL trigger, $6.59 and $5.83.