Shares of satellite-TV provider EchoStar Communications plunged Tuesday on worries that the company would make a bid for wireless spectrum.
EchoStar’s stock hit a session low of $37.85 per share Tuesday after closing Monday’s session at $42.36 as investors fretted that the company would participate in the Federal Communications Commission’s 700-megahertz wireless auction Jan. 24. Shares managed to rebound from the low and closed the day down $2.05 each, or 4.8%, at $40.31.
A representative at EchoStar would not confirm nor deny that the company was planning to bid for the spectrum. Meanwhile, direct-broadcast satellite competitor DirecTV and cable operators Comcast and Time Warner Cable announced that they are not involved in bids for spectrum.
A bid by EchoStar would be a problem for investors hoping that AT&T will make a play for the company before year’s end -- a rumor that has swirled around these two companies for months. It would also explain the violent reaction in the stock this morning.
“There is a lot of speculative money in [EchoStar] right now,” Kaufman Bros. analyst Todd Mitchell said.
The problem is that if both EchoStar and AT&T are bidding for same spectrum, they cannot be involved in discussions, according to Federal Communications Commission anti-collusion rules.
Companies planning to participate in January’s auction needed to make their intentions known to the FCC by Monday. However, the list of bidders is not likely to be released to the public for a few weeks.