Wall Street executive says Dish could file for bankruptcy in the next 4 to 6 months
Back in November, we told you that a particularly poor third-quarter report from Dish Network led Wall Street firm MoffettNathanson to say, "The overwhelming probability here has always been that Dish would enter bankruptcy sometime in the next few years. Today’s results likely accelerate that." This past March, when Dish turned down an option it held to buy some 800MHz spectrum from T-Mobile (for which it already made a $100 million payment to T-Mobile to extend the expiration date of the option), the company made a telling statement in an SEC filing.
EchoStar/Dish may burn through too much cash to continue operating as a going concern
In an SEC filing explaining its decision to pass on the airwaves it could have purchased from T-Mobile, Dish itself wrote that it will burn through a "substantial amount of cash" in the next 12 months, and it "raises substantial doubt about [the company's] ability to continue as a going concern." Per Mobile World Live, MoffettNathanson is a sell-side Wall Street boutique that focuses on sectors including telecommunications. Senior Managing Director Craig Moffett has made a new forecast about Dish Network that includes a prediction of when Dish will go bankrupt.
Dish lost 81,000 net prepaid wireless subscribers during Q1 2024
At the beginning of this year, EchoStar merged with Dish Network. On May 8th, after EchoStar reported first-quarter earnings, Craig Moffett wrote in a note to clients that the most likely outcome for the company is a bankruptcy filing over the next four to six months.
During the earnings call held with the media after the latest earnings report, EchoStar CFO and EVP Paul Orban said that the company has a $2 billion debt it must pay in November after it made a $1 million debt payment in March using cash on hand. The future does not look good as the executive notes that the company does not have the cash on hand to make the November payment.
"We do not currently have necessary cash on hand, or projected future cash flows, to fund fourth quarter operations or the" debt coming due in November, Orban said. "We are in discussions with funding sources at all levels in our capital structure." It must irk EchoStar that Dish paid T-Mobile $100 million to extend the expiration date for the 800MHz in low band spectrum that it didn't buy anyway.
Moffett says that EchoStar will struggle to find funding and cannot sell most of its wireless spectrum before 2026 ends. Due to their heavy spending in previous spectrum auctions (partly due to higher pricing thanks to Dish Network's participation in the auctions), competitors like Verizon, T-Mobile, and AT&T may not be in the financial position to buy wireless spectrum from Dish.
The company had 7.3 million wireless subscribers at the end of the 2024 first quarter
Dish still has to meet goals placed on it by the FCC created to justify the regulatory agency's approval of T-Mobile's acquisition of Sprint. The next goal requires Dish to cover 75% of each of its spectrum license areas with 5G by 2025.
The quarterly numbers just do not look good for Dish. During the first quarter of 2024, the company lost 81,000 prepaid phone subscribers matching the performance of the first quarter of 2023. Orban says that Boost Mobile was net positive for subscriber growth in March, so there is hope that the momentum has changed. And with the launch of Boost Infinite, the company is busy trying to transition subscribers to its own 5G network.
At the end of the first quarter, the company had 7.3 million wireless subscribers and retail wireless revenue fell to $905.8 million from $974.9 million during the same quarter a year ago.
John Swieringa, president of technology and COO at EchoStar and Dish Wireless, says that five out of 10 devices it activated in Q1 could connect to Boost's 5G network alongside the networks owned by its MVNO partners. Three out of five devices can connect directly to Boost's network infrastructure.
But unless there is a major cash infusion, time is ticking down for EchoStar and Dish.
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