As debt deadlines loom, EchoStar’s position looks increasingly precarious

EchoStar is in a tough spot. Its Dish arm has made a lot of bets on a greenfield 5G network, including going all-in on OpenRAN. That considerable investment, combined with consistent subscriber losses at its legacy pay TV arm, means the company lost over $200 million in the second quarter of this year, having made a similar amount in profit a year ago. On top of all that, it has $2 billion of debt that needs repaying by November and it doesn’t have the cash to do so.

"The EchoStar team continued to perform as planned in the second quarter of 2024,” insisted Hamid Akhavan, EchoStar CEO, alongside its Q2 numbers. “We directed efforts on aligning key business synergies and objectives, focusing on profitable customer acquisition and retention efforts, and making improvements in our go-to-market approach for retail wireless. In addition, we are in constructive discussions to address necessary financing, working to strengthen our consumer offerings and value propositions, enhancing our state-of-the-art Open RAN network, and driving profitability across the enterprise."

That corporate word-salad is unlikely to have reassured many. Light Reading reports on a couple of analyst research notes painting a bleak picture of EchoStar’s current predicament, one predicting bankruptcy before the end of the year. It seems fair to assume the looming debt deadline is the main reason for this view and those aforementioned ‘constructive discussions’ seems to be complicated by the perception of financial shenanigans when EchoStar merged with Dish at the start of this year.

Charlie Ergen, co-founder and single biggest shareholder of EchoStar/Dish, was the driving force behind that move. He was a professional gambler early in life and seems to have maintained that tendency in his telecoms career. All parts of the business are consistently losing subscribers, with little sign that its 5G investments are likely to pay-off significantly anytime soon, and the company has a total debt of around $20 billion. Something’s got to give and that might just happen soon.