US satellite operator EchoStar has not had the best of weeks. August 12th saw the company report revenue had fallen by 9.3 per cent and a net loss of $205.6 million (from a profit during the same period last year of $212.7 million). Its share price, already depressed, fell back by 6.1 per cent to about $15.56 per share.

Investment bank JPMorgan Chase & Co. reiterated an ‘Underweight’ rating on EchoStar and issued a $12 target price on shares of EchoStar in a research note on August 12th. However, Benjamin Swinburne, an analyst from Morgan Stanley, maintained a ‘Hold’ rating on Echostar with a price of $14.

The downbeat position reflects that EchoStar lost customers across all of its business segments—pay TV, broadband and wireless—during Q2/2024, as the company works to refinance $2 billion in debt that comes due in November, and which it currently does not have the funds to cover.

EchoStar said total revenues for the first six months of 2024 were $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.

CFO Paul Orban told analysts 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 added. “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.”

EchoStar lost about 16,000 net wireless subscribers during the quarter. In broadband, EchoStar lost 23,000 net subscribers compared to 55,000 in the year-ago period; but it lost more than 100,000 net pay-TV subscribers, which was an improvement compared to losing 294,000 in the year-ago quarter.

Its revenues from the pay-TV segment were down 10 per cent year over year to $2.67 billion. At the close of the
quarter, net pay-TV subscribers were roughly 8.07 million, including 6.07 million Dish TV and 2 million Sling TV
subscribers. The reduction in net subscriber losses was attributed to lowered gross new Dish TV activations, partially offset by an increase in Sling TV subscribers and a fall in churn rate for Dish TV.

While August 12th saw Echostar’s share price fall by $5 to $15, August 13th saw a recovery rising by 12.5 per cent to
$17.46.

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Categories: Blogs, Business, Inside Satellite, Results

Tags: Dish TV, Echostar, Morgan Stanley, Sling TV