News

The new year sees Charlie Ergen’s telecoms empire pieced back together, combining satellite firm EchoStar with struggling wireless and TV player Dish Network.

By: Harry Baldock, Total Telecom

Satellite communications company EchoStar was initially spun off from satellite TV company Dish Network back in 2008, with the moved hailed as allowing both companies more flexibility and investment potential.

Now, over 15 years later, Charlie Ergen, chairman of both firms, is putting the band back together.

The deal to reunite Dish Network with Echostar was first announced back in August last year, with Ergen positioning the move as a focusing on long-term stable growth. The move will see EchoStar’s well-established satellite communications network combined with the greenfield 5G deployments from DISH, with the latter already covering over 70 percent of the US population.

“The transaction is expected to generate significant cost and revenue synergies, and the strong asset portfolio of the combined company paired with its enhanced free cash flow generation capability and strengthened capital structure, are expected to drive long-term value creation for our shareholders and other stakeholders,” said Ergen at the time.

Indeed, the tie-up has a lot going for it. Complementary licenses for both US terrestrial and global satellite spectrum offer some interesting potential for converged packages, particularly with regard to the emerging field of direct-to-smartphone satellite services. It also offers a clear route to market for these new services, with Dish carrying around 7.5 million wireless subscribers, 8.8 million pay-TV subscribers, and 6.7 million satellite subscribers – although these numbers have begun to dwindle over the past year.

But while Dish–EchoStar’s press release confirming the deal’s closure is flush with talk of synergies and the latent potential of the combined entity, it broadly brushes over Dish’s precarious financial position.

Since deciding to become the US’s fourth national wireless player in 2019, Dish’s expensive 5G rollout and the wider transition of their business model has seen the company take on around $21 billion in debt, with some analysts suggesting that the company faced the “overwhelming probability” of going bankrupt in the next few years.

The merger with EchoStar – thereby shifting some of Dish’s debt onto EchoStar’s balance sheet – should help alleviate some of the company’s immediate debt pressures but is far from a long term solution.

Following the conclusion of the merger, Dish Network will continue to exist as a wholly owned subsidiary of EchoStar.

“This merger brings us one step closer to our goal of offering ubiquitous connectivity to people, enterprises and things, everywhere,” said Hamid Akhavan, President and Chief Executive Officer of EchoStar, who will lead the newly merged business. “Together we’re better positioned to realize the connected future by leveraging every type of transport, combined with smart, enabling technologies and fully integrated services. Our superior portfolio of technology, spectrum, engineering, manufacturing and network management expertise will deliver the unparalleled connectivity solutions that customers demand.”

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