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Verizon CEO calls speculation on Dish deal a 'fantasy'

After the AT&T-DirecTV deal, Lowell McAdam sets the record straight on rumors of a Verizon buy of Dish.

Verizon Communications CEO Lowell McAdam on CNBC talking about the Netflix/Comcast deal. Screenshot of CNBC video

Verizon CEO Lowell McAdam laid to rest on Tuesday rumors that his company is looking to buy satellite TV provider Dish Network.

Following AT&T's announcement that it intends to buy DirecTV for nearly $49 billion, rumors started circulating that Verizon might be interested in picking off the other satellite TV provider in the business. But during an investor conference this morning in Boston, McAdam shot down those rumors.

"I know there are reports out there that we are talking to Dish," he said. "I can tell you now, that is someone's fantasy. There were not, and there are not, discussions going on with Dish."

McAdam went on to say that Verizon is not interested in owning a satellite TV company at this point. Instead, he said, the company is more focused on providing over-the-top video service via its wireless network. McAdam also said Verizon is still paying off its $130 billion merger with former parent company Vodafone.

Verizon's video play

Verizon indeed looks poised to move more into the video market. The company is planning to use assets it bought from Intel's Intel Media division to help build out its over-the-top video service for mobile devices. In February the company showed off some new multicast video distribution technology, and it said on a separate conference call Tuesday, while discussing its upgraded LTE network ( which it's branding XLTE), that it will likely have more news later this week on its multicast service.

Talk of Verizon potentially buying Dish Network began percolating after AT&T's announcement Sunday that it plans to buy DirecTV. When the talks between AT&T and DirecTV were first reported, there was some speculation that AT&T was not really interested in DirecTV. The idea was that its discussions with DirecTV were really a ploy to buy Dish Network, which many people speculated was a more attractive takeover candidate because of its large high-frequency spectrum portfolio. These people said AT&T was trying to "smoke out" Dish.

But now that AT&T has gone through with its plan to buy DirecTV, it leaves Dish in a bit of lurch, said Craig Moffett, a senior analyst at MoffettNathanson.

"Dish Network hasn't been so much 'smoked out' as it has merely been smoked," Moffett said in a research note published Monday. Moffett said now that AT&T has bought DirecTV, Dish is running out of options. And the only thing left now is a Hail Mary pass to a company such as Google or some other industry outsider.

Moffett called speculation that Verizon might buy Dish "more wishful thinking than analysis." And now it appears that Verizon's McAdam has confirmed that notion.

Verizon doesn't need Dish.

Indeed, Verizon is in a very good position in terms of its spectrum holdings. This means it has little reason to buy Dish.

Verizon has already built its 4G LTE network using a nationwide license of its 700MHz spectrum. And the company is about halfway done upgrading the 4G LTE in most major cities with AWS-1 spectrum. Some of this spectrum it acquired in 2006 during an auction, and some of it came from a spectrum swap with T-Mobile. The company announced yesterday that it's rebranding the upgraded network as XLTE to reflect the increased capacity and speedier peak speeds customers can get on the upgraded portion of its network.

While Verizon executives say they're still in a good position in terms of spectrum, McAdam noted Tuesday that he's always looking for more spectrum to add to the company's portfolio. He said Verizon will "participate fully" in the upcoming AWS-3 auction scheduled for later this year. And he praised FCC Chairman Tom Wheeler for not setting any conditions or limits on the amount of spectrum that can be acquired through this auction.

He also noted interest in the FCC's other upcoming auction for 600MHz spectrum. This auction is a bit more controversial given that the rules the FCC has adopted will set aside some spectrum in certain markets for smaller carriers to bid on. McAdam said more information is needed to know how the process will work. But he remains positive.

As for Dish, the company's prospects for a sale or even a partnership to put its wireless spectrum to work are diminished following the AT&T-DirecTV deal. Dish controls more than 50MHz of spectrum, which includes 40MHz in the AWS-4 band and 10MHz in the 1900MHz PCS H Block, which it bought in an FCC auction in January. The company's leader, Chairman Charlie Ergen, has said Dish is ready to "harvest our investments." But now it needs a partner to help make that happen.

T-Mobile is the only mobile player left for the company to merge or partner with. Last year, Dish bid on and failed to acquire Sprint, which was bought by Softbank. But with talk that Sprint is interested in buying T-Mobile, Dish could again be left without a dance partner.