EchoStar bags US$2.7 billion US navy mobile contract

The deal will not immediately solve all of the mobile and satellite firm's well-publicised financial problems, but it serves as welcome piece of positive news in this troubled time for the telco.

EchoStar's cellular brand Boost Mobile will fulfil the contract alongside sister company Hughes Network Systems, a supplier of satellite broadband and managed network services. Together the pair will provide 5G-based mobile services and devices – mainly smartphones, but potentially also including tablets, IoT equipment and other 5G devices – to the Department of Defense and other federal agencies, both in the US and for temporary duty international travel.

The US navy, which naturally falls under the remit of the DoD, put the contract up for tender in January, at the time explaining that it would initially be a one-year deal with the option to extend in annual increments to a maximum of 10 years.

EchoStar estimates the value of the contract at up to $2.7 billion over the decade, if all the various yearly options are taken up.

Initially then, this will not be a huge payday for EchoStar and its subsidiaries. But they will surely be celebrating the win.

EchoStar and its Dish Wireless business – whose name is notably absent from the announcement, the firm preferring to use its Boost Mobile brand instead – have spent 2024 to date desperately searching for external funding to ensure their survival.

At their first quarter results call last week, executives reiterated that while the company was able to pay off $1 billion of debt that matured in March, it does not have the cash to fund a further $2 billion debt maturity in November, nor will it be able to afford to operate from the fourth quarter of the year.

EchoStar and Dish CEO Hamid Akhavan appeared optimistic that the companies, which merged at the start of the year, ostensibly to shore up Dish's financial position, will find a backer. The companies have fielded a number of offers and are pursuing more than one option, it seems. The chief exec pledged to share more in due course. Nonetheless, rumours of an imminent bankruptcy filing have intensified.

Clearly, such talk has not damaged the firm's ability to win major deals. The navy contract is the second in as many months, Echostar having announced in March that the DoD is extending an existing award for private 5G networks at naval bases in Hawaii and Washington state through to 2025.

"EchoStar Corporation is proud to provide the DoD and other federal agencies with significant technological advancement using our innovative, Open-RAN based wireless connectivity capabilities," said John Swieringa, president technology and COO at EchoStar.

"Through our Boost Mobile brand, the Echostar team will deliver critical 5G solutions, including devices from multiple manufacturers as well as a native 5G Open RAN network," Swieringa added.

It seems EchoStar has exactly the right assets to fulfil this contract, given that Dish is building out a cloud-native Open RAN network in the hope of becoming a credible fourth nationwide MNO in the US market and that Hughes brings the satellite piece of the puzzle, and both hail from the same stable. That being the case, you could argue that EchoStar couldn't afford not to win this deal. Now it just has to stay operational long enough to carry it out.