Company Reports

EchoStar has broken from its television legacy, agreeing to sell its satellite and online television operations to rival DirecTV. The move isn't surprising considering that EchoStar's predecessor, Dish Network, has made a massive bet on wireless spectrum, spending about $30 billion (more than $100 per EchoStar share) to acquire various spectrum licenses over the past 15 years. Selling the television business, which should close in late 2025, helped EchoStar raise additional capital, which it will plow into the wireless business. The firm will need to invest heavily in additional network coverage, customer acquisition, and developing new enterprise service offerings to build a niche in the wireless market. We expect EchoStar will again need to raise capital two or three years from now, even if the business performs well. Uncertainty remains very high.

EchoStar plans to undertake a complex series of transactions to improve its viability. The firm will sell its television business to DirecTV in exchange for about $10.5 billion, primarily composed of debt assumption. Existing EchoStar convertible bondholders will provide $5.5 billion of new capital.

EchoStar primarily consists of Dish Network assets following the firms’ merger, which closed at the end of 2023 and left EchoStar as the surviving entity. Dish made a massive bet on wireless spectrum, spending about $30 billion (more than $100 per EchoStar share) to acquire various spectrum licenses over the past 15 years. The firm faces a highly uncertain future as it seeks to carve out a niche. More critically, it is rapidly running out of time to secure the financing needed to remain viable.

EchoStar’s second-quarter results provided little new information besides confirming that it has yet to secure additional capital as a $2 billion Nov. 15 debt maturity draws nearer. Our $20 fair value estimate, which assumes EchoStar remains a going concern, is unchanged, and we reiterate our Extreme Uncertainty Rating, which reflects the high probability that the firm cannot secure capital.

EchoStar delivered relatively weak first-quarter results as its wireless business again lost customers, the Hughes segment posted a big drop in revenue and margins, and the television business continued to decline. Critically, the firm has yet to secure financing, again stating that it is evaluating multiple offers. We are reducing our fair value estimate to $20 from $25, which assumes EchoStar can raise additional capital. However, we reiterate our Extreme Uncertainty Rating, which reflects the high probability that the firm is unable to secure capital on acceptable terms.

EchoStar primarily consists of Dish Network assets following the firms’ merger, which closed at the end of 2023 and left EchoStar as the surviving entity. Dish has made a massive bet on wireless spectrum, spending about $30 billion (more than $100 per EchoStar share) to acquire various spectrum licenses over the past 15 years. The Dish/EchoStar merger pushes the wireless effort toward the enterprise and wholesale telecom markets, which makes sense given the maturity of the traditional smartphone wireless market. Still, the firm faces a highly uncertain future as it seeks to carve out a niche.

EchoStar’s fourth-quarter results and management commentary, which oddly excluded remarks from chairman Charlie Ergen, offer little additional clarity concerning its future financing plans and strategy. The firm claims it is holding discussions with multiple potential partners but feels no immediate pressure to secure additional capital, despite looming debt maturities in November. We reiterate our Extreme Uncertainty Rating, and our fair value estimate remains $25.

EchoStar primarily consists of Dish Network assets following the firms’ merger, which closed at the end of 2023 and left EchoStar as the surviving entity. Dish has made a massive bet on wireless spectrum, spending about $30 billion (more than $100 per EchoStar share) to acquire various spectrum licenses over the past 15 years. The Dish/EchoStar merger pushes the wireless effort toward the enterprise and wholesale telecom markets, which makes sense given the maturity of the traditional smartphone wireless market. Still, the firm faces a highly uncertain future as it seeks to carve out a niche.