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By Renee O'Farrell

Fund manager Phil Falcone recently filed bankruptcy for LightSquared (The case is LightSquared Inc., 12-12080, U.S. Bankruptcy Court, Southern District of New York, Manhattan; Harbinger Capital Partners, Falcone's hedge fund, owned 74% of LightSquared as of January 27). According to Bloomberg, LightSquared Chief Financial Officer Marc Montagner said the bankruptcy "is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network."

Bloomberg reports that the company "listed assets of $4.48 billion and debt of $2.29 billion as of Feb. 29 in a Chapter 11 filing." The spectrum is arguably LightSquared's main asset (read about it here) but it doesn't have much value unless the company can either buy more spectrum, swap with another company or government agency for more useful spectrum, or make a deal with a company, like DISH Network (NASDAQ:DISH), which has some satellite frequencies in a far off band. Tim Farrar explains this last scenario here. Basically, DISH Network would be able to use LightSquared's spectrum to develop a high capacity 4G LTE network that would avoid any GPS issues.

The whole thing may be getting a lot of attention right now but I am interested in something much more actionable - what happens to LightSquared's spectrum? And, more importantly, what does this mean for the wireless industry in general, and more specifically those who invest in it?

The Denver Post said in April that DISH Network wanted "to launch a stand-alone wireless business that would offer mobile broadband, text and voice services to compete against telecom giants AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ)." The idea is to be able to offer "a phone that can be used for talking, texting and surfing the Web at the same time, and with a bill that (users) can understand." To date, DISH Network "has spent more than $3 billion acquiring wireless spectrum that it would leverage for a high-speed fourth-generation wireless network. The company would have to spend another $5 billion-plus to build the network, which would use 4G Long Term Evolution technology and launch in 2014 or 2015." The Denver Post noted "DISH still needs the Federal Communications Commission to ease rules tied to the spectrum before it can move forward."

DISH Network chairman Charlie Ergen stepped down from the chief executive role at the company in June, the idea being that that way he could focus on strategic moves to help the company grow past its current subscriber volume, which has been stalled somewhat recently largely thanks to streaming content like Netflix (NASDAQ:NFLX) and cable services being offered by phone companies, like Verizon's offering of DIRECTV (NASDAQ:DTV) service. "It would be a long shot that we could compete against AT&T and Verizon," said Ergen. "Having said that, it seems like something we want to try to do."

Now, the only question is whether now is the time for investors to jump on board. Sure, there is still a lot of uncertainty but the rewards could be huge.

Right now, DISH Network is trading at $30.59 a share, up just 7.41% year to date. At this price, the company is priced at just 10.85 times its forward earnings. Over the past five years, DISH Network has been able to increase its earnings by an average rate of 20%. Going forward, analysts are predicting that rate of growth will be just 1.42%, yet the company still has a low forward price to earnings ratio. There is even strong hedge fund interest in DISH Network. Dan Loeb's Third Point initiated a $113.92 million position in the company, or roughly 4.56% of the fund's total portfolio, during the fourth quarter while Highbridge Capital Management and AQR Capital Management both upped their stakes in the company that period.

I think that DISH may still be a bit too speculative right now, but this is definitely a stock to watch.

Source: LightSquared And The Value Of Wireless Spectrum