It’s only the second week of January and Dish Network already is spinning more heads than some companies do in an entire year.
Among the revelations this week: More layoffs at Dish Network, affecting employees at its Colorado headquarters. Dish is transferring certain spectrum licenses to an EchoStar holding company. And the company has hired financial and legal advisors to evaluate “potential strategic alternatives.”
The spectrum transactions are designed to “further unlock incremental strategic, financial and operating flexibility for its business following completion of its merger with Dish Network,” according to a January 10 press release.
Specifically, Dish transferred “unencumbered” wireless spectrum licenses – including AWS-4, H-Block, CBRS, C-Band - Cheyenne, 12 GHz, LMDS, 24 GHz, 28 GHz, 37 GHz, 30 GHz and 47 GHz – to the EchoStar Wireless Holding subsidiary.
Dish will continue to retain ownership of 600 MHz, 700 MHz, 3.45 GHz and AWS-3, of which 700 MHz and AWS-3 also remain “unencumbered," the company said.
In a note for investors, MoffettNathanson analyst Craig Moffett said the encumbrance that EchoStar is referring to appears to pertain to whether a given band has already been used as loan collateral. Importantly, “both entities will hold spectrum that carries with it a prohibition on sale prior to the end of 2026,” he said.
But the analyst described EchoStar’s entire press release as “bewilderingly complicated,” ultimately concluding that it’s not putting the company, or its spectrum, up for sale.
“Most companies would immediately announce a conference call to explain the news, most importantly the ‘why’ behind these transactions, but EchoStar is not most companies,” Moffett wrote. “In the absence of explanations from the company itself, we’re left to try to figure it out on our own – but what is most important here is that the assets simply aren’t being divided up in a way that would facilitate a sale.”
EchoStar shares surged 38% Wednesday after the announcement. Dish bonds plummeted on the news, with Bloomberg noting Dish’s debt fell to distressed levels after the maneuver.
Reshuffle = more options
New Street Research (NSR) analysts said that whatever Dish has up their sleeve strategically, putting more cash on the balance sheet will be helpful. “On our estimates, they don’t have a shortfall until 4Q25, but things are tight in the interim and in credit market terms, 4Q25 is just around the corner,” wrote NSR’s Jonathan Chaplin.
Due to the reshuffle, the company has more options now, with a broad array of spectrum transferred to EchoStar and some DBS subscribers having been transferred to Dish Networks, he noted.
The company can now raise debt at EchoStar, backed by all the assets there, or they could do notes backed by specific tranches of spectrum at either EchoStar (AWS-4) or Dish (AWS-3), according to NSR.
“It’s all financial engineering,” said Roger Entner, principal of Recon Analytics, noting that EchoStar Chairman Charlie Egen is quite well known for these types of transactions. Now the individual subsidiaries can raise money on their own.
More layoffs
Amid all of the financial wrangling, Dish submitted a letter to the Colorado Department of Labor & Employment on January 8 informing them of layoffs that will affect more than 150 people.
Most of the job cuts connected to its Englewood, Colorado, headquarters – 80 positions – are for those with the title “Wireless Senior Rep,” according to the filing.
Reports of layoffs at Dish surfaced at various times during 2023, including the more than 500 in Colorado that were revealed in November.
800 MHz or no?
Separately, Dish last year made a $100 million non-refundable down payment on about 14 megahertz of 800 MHz spectrum that it has an option to purchase from T-Mobile as part of the government approving the Sprint merger. Dish has until April 1, 2024, to purchase that spectrum for a total of $3.59 billion or pay a $72 million break-up fee.
Entner said he doesn’t believe it’s a good idea for Dish/EchoStar to buy the 800 MHz spectrum from T-Mobile. “It’s so little spectrum for a lot of money,” he said. “Why throw good money after bad money? [Ergen] has to pay $72 million to get out of it. That’s $72 million well invested.”
NSR analysts said Dish theoretically has the capacity to purchase the 800 MHz spectrum, but they don’t think it’s probable. “This spectrum will be harder to securitize, or they would have done the transaction already,” Chaplin wrote.