EchoStar CEO: Priorities Are Better Wireless Execution, Raising Cash
EchoStar's initial move into the postpaid wireless market "was rushed," as the company had spent a lot of focus on its wireless network infrastructure and not as much on its go-to-market strategy, CEO Hamid Akhavan said Wednesday as the company announced results for the quarter ending March 31. He said the prepaid and postpaid wireless businesses will do better in the second half of the year. Raising cash is one of its biggest objectives, given looming debt and lack of sufficient cash on hand, he said. EchoStar shares closed Wednesday at $15.44, down 11%.
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With $2 billion in debt maturing in November, EchoStar lacks enough cash on hand or projected cash flow to meet the debt or to fund its Q4, Chief Financial Officer Paul Orban said. He and Akhavan said EchoStar is in discussions with numerous funding sources. It has "far more" unencumbered spectrum holdings than the value of its financial obligations, Akhavan said.
Pointing to "yet another quarter of cash burn and subscriber losses," MoffettNathanson's Craig Moffett wrote in a note that "there is little reason to believe that EchoStar has a path to remain a long-term going concern." He predicted bankruptcy in the next four to six months.
Revenue for the quarter was $4 billion, down from $4.4 billion in the same quarter a year earlier. It said it ended the quarter with 6.3 million Dish Network subscribers -- down from 7.1 million year over year -- and 1.9 million Sling TV subs, down from 2.1 million. EchoStar said video sub churn was down. It said it ended the quarter with 7.3 million retail wireless subs and 978,000 satellite broadband subs. In addition, Churn is down in wireless, Akhavan said.
Some subscriber declines are intentional, as there's an increased focus on higher-value customers rather than growing subscriber numbers for the sake of subscriber growth, Akhavan said. EchoStar remains on target to meet an expected $1 billion in cost-cutting synergies from its Dish Network purchase, he said.
Asked about whether EchoStar expects it can meet its 2025 wireless network buildout milestones or will seek an extension, Akhavan said only that the company is focused on the milestones. Questioned about fixed wireless access ambitions, Akhavan said the focus this year is on ramping up the prepaid and postpaid wireless businesses. FWA could be a longer-term direction, he noted.
Akhavan waved off the idea of an imminent Dish Network-DirecTV deal. The two direct broadcast satellite services have "significant synergy" and face similar challenges, but for now he's focusing more on EchoStar's immediate issues, he said.