$2 billion of EchoStar’s debt comes due in November, but does not have the funds to pay
EchoStar lost customers across all of its business segments—pay TV, broadband and wireless—during the second quarter of 2024, as the company works to refinance $2 billion in debt that comes due in November, and which it does not have the funds to cover.
CFO Paul Orban told investors that EchoStar also doesn’t currently have the cash or projected cash flow to fund its fourth-quarter operations.
Orban said during the company’s quarterly earnings call: “Roughly $2 billion of debt will be maturing this November, and currently, we do not have the necessary cash on hand and projected future cash flows to fund fourth-quarter operations, or the November 2024 debt maturity. … We are currently working to address this with our refinancing activities and are in discussions with funding sources at all levels in our capital structure.”
Hamid Akhaven, president and CEO of EchoStar, told analysts on the call: “We continue to make progress and are in constructive discussions with counterparties, which we feel best support our objectives.” Orban and Akhaven did say that only EchoStar’s 600 MHz spectrum has already been borrowed against, leaving it plenty of spectrum to leverage. “Our spectrum asset’s unencumbered,” Akhaven told an analyst. “We can and we will use those as collateral. And the fact that we haven’t done it yet is because we have not arrived. As I mentioned, we had constructive discussions. We’ve not reached a point that we believe that the right deals can be made. And this is a matter of negotiations and progress is being made. No guarantees until they’re done. … We certainly will use the necessary time to make sure that … we make opportunities and deals that are great for long-term success and maximize our value.”
The company reported total revenues for the first six months of 2024 of $7.97 billion, down from $8.74 billion during the same period last year. Net losses for the first two quarters were $312.97 million, compared to EchoStar’s profits of $466.2 million during the first half of 2023.
Still, company executives emphasized the improving customer metrics that the EchoStar is seeing: EchoStar lost about 16,000 net wireless subscribers during the quarter, which is better than the 188,000 that Dish Wireless lost in the year-ago period prior to its re-merger with EchoStar; the company blamed this quarter’s negative subscriber numbers on the end of the federal Affordable Connectivity Program (ACP)—if not for the end of the ACP, EchoStar said, it would have added about 32,000 retail wireless subs.
In broadband, EchoStar lost 23,000 net subscribers compared to 55,000 in the year-ago period; and it lost more than 100,000 net pay-TV subscribers, which was improved performance compared to losing 294,000 in the year-ago quarter.
Operationally, Akhaven said that the company was performing “as planned” and working on “aligning key business synergies and objectives, focusing on profitable customer acquisition and retention efforts, and making improvements in our go-to-market approach for retail wireless.”
“While there is still a lot of work ahead for the team, we are pleased with the performance from the first half of the year, and we’ll use this positive momentum throughout the second half of 2024,” Akhaven said.
Adding more detail later in the call, Akhaven said: “What I have seen in the first half of the year—what we’ve managed to achieve—it’s exceeded my own expectation, candidly. … We’ve made some fundamental changes in the business. This business was hugely declining in terms of number of subscribers. The first thing about for growth, is to arrest the fall; and we have managed to do that and [it] has not been an accident.”
John Swieringa, EchoStar’s COO and president of technology, said that between the company’s existing build-out and its construction projects in-progress, those will be “sufficient to meet many of our build-out requirements over the next year, including our June 14, 2025 milestones. These facilities are for licenses comprising approximately 90% of the aggregate carrying value, including capitalized interest, for our 600 megahertz, 700 megahertz H-Block and AWS-4 licenses.” However, he went on: “For the remaining licenses that we have not yet constructed facilities sufficient to meet our build-out requirements, we will need to raise additional capital to continue our 5G network deployment.”
EchoStar has cut steeply back on network investment as it met its FCC build-out obligations; in the second quarter of this year, it spent $237 million on network deployment, compared to more than $800 million in the prior year’s second quarter.
