Dish still working on rescue plan amidst bankruptcy talk

The US operator's parent company Echostar this week disclosed that it does not have the means to pay off debts that are approaching maturity, but attempted to ease the concerns of investors and industry watchers by sharing that funding talks are ongoing.

Indeed, its declaration that it can't pay its dues is a statutory requirement, and it was keen to point that out. But nonetheless, talk of liquidation is naturally intensifying.

“We have roughly $2 billion of debt maturing in November 2024 and we do not currently have enough cash on hand or projected future cash flows to fund fourth quarter operations or the November '24 debt maturity," Dish chief financial officer Paul Orban said on Echostar's results call on Wednesday.

The announcement comes as no surprise, Dish having indicated earlier this year that it had the available cash to pay off debt that matured in March – and it did so, Orban noted, all $1 billion of it – but not to meet its November obligations.

Orban highlighted the fact that the company is only permitted to consider its current cash position and may not include any new funding sources unless that financing is already committed. That essentially means that it has made the disclosure regardless of the fact that it is still in talks with potential funding sources.

Echostar and Dish CEO Hamid Akhavan addressed that very issue head on at the start of the call, explaining that the company is still exploring a number of avenues to shore up its finances, but understandably was unable to give much away.

"We have fielded a variety of offers and are pursuing those which can support our long-term objectives," Akhavan said. "The complex and delicate nature of this process demands time and confidentiality. We will certainly have more to share in due course."

Reading between the lines, Dish seems relatively optimistic that the offers it is pursuing will come to fruition and it will be able to pay its dues and fund its operations at the back end of the year. But not everyone is confident that Dish will be able to keep its head above water.

Earlier Light Reading quoted analysts at MoffettNathanson as predicting that Dish will be forced to file for bankruptcy.

"After yet another quarter of cash burn and subscriber losses – all of which were broadly in line with expectations, by the way – there is little reason to believe that EchoStar has a path to remain a long-term going concern," the analysts wrote.

That's a pretty strong statement. But a closer look at the firm's quarterly figures only serve to back it up.

Echostar's top line slid a little year-on-year in Q1 to $4.01 billion and it swung to a loss of $107.38 million, while OIBDA fell by 33% to £470.16 million.

The company shed 348,000 pay TV customers in the three months to the end of March, which was fewer than it lost in the year-ago quarter, but still a hefty decline. It ended the period with 8.18 million pay TV customers, including 1.92 million users of its Sling streaming service.

Broadband customers also fell, slipping by 26,000, which was again fewer losses than in Q1 last year. But most telling is the company's performance in the mobile space. It lost 81,000 retail wireless customers during the quarter, the same number as it lost a year ago, to end March with a mobile base of just 7.3 million.

To say Dish has spent heavily in its bid to become a credible fourth mobile network operator in the US is a massive understatement, and its inability to attract and retain customers has been a big problem for years. Further, although it has launched its own 5G infrastructure, most of its customers remain on the networks of its MVNO partners AT&T and T-Mobile US. Essentially, it couldn't be further from monetising that network spend; it generated $4,000 in 5G service revenue in Q1.

According to Akhavan, "the Echostar team performed as planned" during Q1, which is a carefully-worded canned statement designed to make us believe that everything's on track. But clearly that couldn't be further from the truth. It's squeaky bum time for all concerned.