Analyst sets timeframe for possible Dish bankruptcy

MoffettNathanson senior MD Craig Moffett predicted Dish Network could go bust within the next six months, the analyst’s first solid timeline for a bankruptcy he has been warning of for the past three years.

In a research note issued yesterday (8 May) after EchoStar revealed earnings for Q1, Moffett stated a bankruptcy within the next four-to-six months was the most likely outcome for the company.

A little over four months after EchoStar and Dish Network merged to provide the latter with financial stability, it is still in dire financial straits.

EchoStar CFO and EVP Paul Orban stated on the earnings call it will be required to pay off $2 billion in debt maturing on 24 November after it covered a $1 billion payment in March with cash on hand.

“We do not currently have necessary cash on hand, or projected future cash flows, to fund fourth quarter operations or the” debt maturing in November, Orban said. “We are in discussions with funding sources at all levels in our capital structure”.

Moffett stated EchoStar would struggle to find additional sources of funding and cannot sell the bulk of its wireless spectrum before the end of 2026.

He explained while Dish Network was an active bidder against rivals T-Mobile US, AT&T and Verizon in previous spectrum auctions, it mainly drove up prices as a fourth bidder.

With its rivals spending heavily on previous spectrum auctions, Moffett stated they may not be financially positioned to buy Dish Network’s spectrum, particularly AT&T and Verizon.

“To state the obvious, none are in the position to spend aggressively on new spectrum”.

He also noted spectrum transactions take years to clear regulatory hurdles and even longer if they are part of a bankruptcy proceeding.

EchoStar president and CEO Hamid Akhavan addressed the company’s refinancing efforts during the earnings call, stating it had fielded a variety of offers while “pursuing those which can support our long-term objectives”.

Dish Network’s next Federal Communications Commission target is to cover 75 per cent of each of its spectrum licence areas with 5G by 2025, which Akhavan noted would require additional capital.

Numbers
EchoStar lost 81,000 Boost Mobile prepaid phone customers, matching its Q1 2023 performance.

Akhavan and Orban said Boost Mobile was net positive for subscriber growth for March and they expect additions to ramp in the second half of the year.

While Dish Network launched a nationwide beta of its Boost Infinite post-paid 5G service in late 2022, Akhavan stated its “initial approach to the market was rushed”, with the company focused on building a greenfield open RAN network.

“We realise we have work to do to improve our offerings and execution in a post-paid space,” which is “a key objective” for H2.

John Swieringa, president of technology and COO at EchoStar and Dish Wireless, stated five out of ten devices it activated in Q1 could connect to its 5G network alongside its MVNO partner’s set-ups, with three of five directly connected to its infrastructure.

“We are actively transitioning existing customers with network compatible devices”, along with adding new users, he said.

The company had 7.3 million wireless subscribers at end-Q1, with retail wireless revenue falling from $974.9 million to $905.8 million.

EchoStar reported a net loss attributable to shareholders of $107.4 million compared with a $253.5 million profit, with revenue down 8.5 per cent to $4 billion.