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EchoStar said that it has "substantial doubt" about its ability to continue as a going concern.
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It's not sure how it will pay $1.98 billion in debt that is maturing in November 2024.
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In Q4 2023 the company lost 123,000 Boost retail wireless customers.
Dish Network’s future as a 5G service provider doesn’t look very bright after the release of Dish parent company EchoStar's Q4 2023 earnings today. The less-than-stellar Q4 earnings coupled with a 10K SEC filing that included warnings that Dish doesn’t have enough cash to meet its $1.98 billion in debt maturity due in November paint a bleak picture for the company.
EchoStar became the parent company of Dish in late 2023 in a move aimed at providing more free cash flow to the company to fund the rest of its 5G network buildout. In EchoStar’s 10K SEC filing the company said it ended 2023 with $2.4 billion in cash and cash equivalents. In March $951 million in debt will mature, which the company said it will pay with cash on hand. But the $1.98 billion in debt that is maturing in November 2024 remains a concern.
“Because we do not currently have committed financing to fund our operations for at least 12 months from the issuance of these consolidated financial statements, substantial doubt exists about our ability to continue as a going concern,” the company said in the 10K. “To address our capital needs, we are in active discussions with funding sources to raise additional capital and restructure our outstanding debt.”
During the company’s Q4 earnings call with investors, EchoStar executives tried to put a positive spin on the situation. CEO Hamid Akhavan said that EchoStar still has time to find additional funding and/or offload assets in order to meet its debt requirements. “I’m going to take the time and make transactions that are in the best interest of all parties,” Akhavan said. “I do not find myself under the gun to make transactions in rapid fire.”
He also said that the company plans to cut expenses by $1 billion this year and those cuts will come from all departments.
Akhavan said that he believes that by accelerating the pace of moving Boost customers off of Dish’s MVNO partners’ networks and onto the company’s 5G network, Dish will be able to significantly reduce the amount of money it currently pays to its MVNO partners T-Mobile and AT&T. He added that Dish is moving customers onto the 5G network now through new customer activations and over-the-air migrations. “This will help us with owner economics,” he said.
Boost bleeds 123K customers
Dish continues to lose wireless customers at a rapid rate. In Q4 the company lost 123,000 Boost retail wireless customers, which is up from the 25,000 it lost in the same quarter a year-ago. The company now has just 7.38 million total Boost subscribers, which is about a 2.6 million decline from the 10 million Boost Mobile customers that Dish had when it purchased Boost Mobile from T-Mobile in 2020.
Dish blamed the increase in net retail wireless subscriber losses to the lower number of activations because of its focus on acquiring high-value customers with better devices that will work on the company’s 5G network.
Akhavan said that in January the company launched seven more wireless devices that will work on Dish’s 5G network, and that resulted in higher unit costs. However, he added that because these devices will work on Dish’s 5G network there will be savings from on-net usage versus using the MVNO networks.
When asked how Dish plans to attract more Boost Infinite postpaid customers to its 5G network, Akhavan said the company will market it with local advertising versus big national advertising buys and will improve its digital distribution. He also said that the slow uptick in Boost Infinite postpaid customers was not due to the network but was due to the company not having the right partners and systems set up to ensure a good customer experience. “Our entry was not optimized internally, and we will fix it this year,” he said.
2024 is a transition year
Nevertheless, when asked if 2024 will be a turnaround year for Dish, Akhavan said that he believes 2024 will be a “transition year” but he declined to provide any specific numbers in terms of net adds that he believes Dish will achieve this year.
In terms of the 5G network buildout, John Swieringa, president of technology and COO for Dish, said that the company’s 5G network now covers 73% of the U.S. population and provides 5G voice to 200 million people. He said that at year-end 2023 Dish had 20,000 5G sites up-and-running.
However, when asked about meeting the FCC-imposed deadline of building its 5G network to reach 75% of the U.S. population by mid-June 2025, Swieringa said that the company is on track to do that but that the remaining sites left to build are more rural and will cover a smaller number of people and therefore will depend upon the company’s funding requirements.