In a bid to enter the broadband market, satellite TV provider DISH Network Corp. (DISH) completed the acquisition of DBSD North America, Inc. and TerreStar Networks, Inc. The company spent nearly $3 billion to gain access to 40 Mhz spectrum authorization for its domestic market.

In March 2011, DISH agreed to acquire satellite-based wireless services provider DBSD North America Inc. for $1.4 billion, and then followed it up with another agreement of acquiring the TerreStar Networks Inc. for $1.375 billion in June 2011.

The growing popularity of triple-play services among cable and telecom subscribers, which DISH lacks in its portfolio, has increased customer churn for the company. Additionally, large telecom carriers like Verizon Communication Inc. (VZ) and AT&T (T) have started deploying fiber-based pay-TV services, which has further increased competition in the pay-TV industry. So in order to cash in on the lucrative opportunity as well as to diversify its product portfolio, the company is focusing on spectrum acquisition.

DISH Network currently owns a slot of highly demanded 700 MHz wireless frequency, which is generally used for 4G LTE network. We believe that by implementing these slots of airwaves, the company can form a formidable video-on-demand service over a wireless network of mobile handsets such as smartphones and tablets.

DBSD is a hybrid satellite and terrestrial communication service provider. This acquisition will provide the extremely valuable spectrum of DBSD for both wireless and wireline communications to Dish Network.

So the acquisition of both TerreStar and DBSD will help DISH not only to penetrate a new segment but also to add a new revenue stream by means of offering triple pay services (voice, video and Internet) to its customers.

We maintain our long-term Neutral recommendation for DISH Network. Currently, DISH Network has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

DISH Network Corporation was founded in 1980 and is headquartered in Englewood, Colorado. The company together with its subsidiaries operates the DISH Network direct broadcast satellite (DBS) subscription television service in the U.S.

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