Dish Network’s Charlie Ergen addressed everything from Dish’s current position in the market to its desire to operate the best network in the world and various spectrum bands in between – all without showing his cards too much.
The chairman of Dish was asked about those issues and more during Dish’s Q1 quarterly earnings call on Monday.
Ergen acknowledged that right now, Dish is a liquidity story in the market, and “obviously we have to address that.”
From a debt perspective, the market isn’t open to Dish, but “we’re asset rich,” he said. “So we look at all the different levers we have.”
He declined to go into detail about those levers but over the years, “we've been a good steward of capital and we think that there's – there are many things that we can do and some that we can do to meet those maturities.”
The first thing it has to do is focus, and he’s directing the team on building the best network in the world while entering the more profitable postpaid business. Currently, in wireless, it’s been steadily losing customers in the Boost Mobile prepaid business.
Ergen was asked if he thinks the FCC will give Dish any formal recognition for meeting its buildout requirements. Apparently the FCC didn’t do anything formal when it met its obligations last year and he doesn’t expect that to happen this year, although it would be nice from a capital and market confidence perspective.
He also said the competition will always fight it at the FCC in an attempt to thwart Dish’s efforts. Dish has been called “hoarders” and “speculators,” and “none of that was true,” he said, referring to Dish’s reputation over the past dozen or so years. But when three or four companies say the same thing, “we don’t quite punch above our weight.”
Three years ago, people speculated that Open RAN wouldn’t work and/or that it would take 10 years. “You’re always going to have that noise from people who aren’t doing it,” he said.
‘Small margin of error’
Asked about market conditions – which have been brutal, especially to Dish – and if Dish is conservative or sympathizes with the market’s view, Ergen said Dish has a narrow window of opportunity to execute and address its capital structure, and it has a small margin of error. But it’s not a place that’s unfamiliar to Dish.
“We’ve been there before,” he said.
“I think the market looks at us as half empty, maybe even 90 percent empty today,” he said. “I think the truth is that the glass is more than half full. We’re in our 43rd year so we didn’t start yesterday. We’ve had a lot of experience in similar situations,” with a seasoned management team.
“We have spent $34 billion for spectrum that has gone up in value,” he said. “We’re building a world class network… I’ve traveled the world and there is not another network that is as advanced as ours” and up and operating in 50 markets. With cloud-based open RAN and VoNR, it has advantages in the architecture.
5G network progress
Dish executives reiterated that it’s on track to meet its June 2023 requirement to offer 5G to 70% of the U.S. population. That was part of the deal when the U.S. government set it up to be the fourth facilities-based wireless service provider to replace Sprint.
By late March, Dish had started construction on about 18,000 sites and it needs about 16,000 sites to be completely fibered and powered in order to meet the June 2023 deadline.
“We’re well on our way to meeting the 70 percent with respect to the 600 MHz licenses,” said Dave Mayo. EVP of Network Development at Dish.
Dish will take “a little bit of a pause” in terms of some of the new markets and the capex it spends after it hits its June milestone until the late 2024 or early 2025 timeframe, Ergen said.
In a note for investors after the earnings call, New Street Research (NSR) analysts said they now think Dish needs to raise just $400 million in 2024 to fund operations for its network buildout.
“The pared back deployment cuts our cash burn at Networks for 2023 by $150MM and for 2024 by $850MM, preserving $1BN of cash in these years (if they still plan on meeting the 2025 targets in all license areas, they will need to spend the capex in 2025),” wrote NSR analyst Jonathan Chaplin.
Along with the $400 million in 2024, “they will need to raise another $1BN to fund the convert – they said they would do with equity or with another convert (we assume the latter, given where the stock is trading),” Chaplin said.
Recently reports circulated about Dish canceling 600 MHz licenses, but that was actually a clerical error. Ergen said Dish had a lease with T-Mobile for some markets, and that lease was up for renewal. When Dish went in to cancel the lease, someone inadvertently canceled the license. He doesn’t think that will be an issue to get that straightened out with the FCC.
Dish is already capable of serving 70 million people with its 5G Voice over New Radio (VoNR) network through Boost Mobile, which is a little more than 50 cities, said Dish Wireless President and COO John Swieringa.
They expect that by the end of the year, they’ll be serving the majority of the U.S. population with commercial VoNR. It’s making progress on getting VoNR on its Band 70 devices and expects that to pick up as the year continues.
As T-Mobile CEO Mike Sievert said on his earnings call last month, Dish received an extension of 60 days to decide if it wants to purchase 800 MHz spectrum from T-Mobile for $3.5 billion.
Ergen echoed that statement and while it’s challenging for Dish to come up with the funds to do that transaction, Ergen, without going into specifics, said there are ways it can make that deal happen. If it doesn’t buy it, Dish faces a penalty of paying $72 million to T-Mobile.
“We think it would be, from a competitive point of view, that’s important low band, particularly uplink spectrum,” Ergen said.
Dish has taken over some Sprint 800 MHz sites, but Mayo said it’s not a substantial number. It also uses Dish low-band radios as opposed to Sprint gear.
Ergen congratulated Elon Musk’s SpaceX for winning over the FCC in the 12 GHz proceeding.
“We came on the short end of that stick,” he said, adding that Dish paid for the spectrum in the 12.2-12.7 band but it’s not going to be able to access it for mobility, which is what it wanted. The FCC recently signaled that it’s considering fixed wireless for the band, but it rejected mobile services.
“For us, mobility is really the key use, and we’re disappointed … We believe we could have used it in a non-interfering way,” he said. “I respect their decision” at the FCC, which did its own analysis.
The FCC is opening comments on the 13 MHz band, and that represents another opportunity. “We’ll just have to wait and see,” he said.