Dish Network has put a bit more flesh on the bone about its prepaid strategy, holding that it will focus on gaining and retaining profitable customers rather than chasing big subscriber counts.
In the wake of taking over Sprint's prepaid Boost business following the T-Mobile merger, Dish today announced five new prepaid wireless plans that are all less than $50, including a $10 per month starter plan. That new handful of plans joins Boost's new customer loyalty-focused "$hrink-It!" plan that decreases the monthly rate by $10 after six on-time payments.
Speaking on today's Q2 2020 call, Dish execs said the general idea with Boost in the near-term is to implement a disciplined strategy to gaining and retaining profitable customers while it is saddled with lower-margin MVNO economics. Dish intends to be more aggressive as it starts to build out a 5G network that gives the company so-called "owners economics" for its mobile products.
"We have to pivot that business," Charlie Ergen, Dish's chairman, said of Boost, noting that Sprint had the luxury of running Boost on a contribution basis because they ran the network.
"Some customers that were very good for Sprint potentially aren't good customers for us," he added, noting that Dish will be doing some "clean up" of the Boost customer base to help get the economics fully in-line.
Dish's goal is to be at least $1 EBIDTA and cash flow positive on Boost subs, and move those numbers materially higher as Dish builds its network.
'Steady progress' on the network
Ergen said Dish is making "very steady progress on our buildout" as the company moves to meet FCC requirements.
"Our approach really is to vector ourselves toward the 70% milestone that must be completed by June of 2023," said Dave Mayo, Dish's EVP of network development.
Mayo said Dish is building out its field-based organization and is midway through completing RF designs for all markets, with discussions well under way with top and mid-tier tower owners and vendors.
Ergen said Dish has not given up plans to launch a 5G network core in at least one market this year, but stressed that radios won't be arriving in scale until the second half of 2021 as the company plows ahead with its open RAN approach.
"Getting the supply chain and radios is the longest pole in the tent for us right now," Ergen said.
Meanwhile, Dish has already signed on a handful of vendors for the effort, including Fujitsu, VMware, Mavenir and Altiostar.
Ergen said more than 100 companies have responded to Dish's requests for proposal (RFPs), and the company has whittled things down to two to three potential vendors to each category that remains.
"We are uncompromising that they have to share the vision and take some risk with us to get there," he said.
Dish is also sticking with its guidance on the $10 billion it will take to build out the new network. Dish will use its overall business, including pay-TV, to help fund part of it. Dish has also raised about $2 billion and expects to be opportunistic about future sources of funding.
Noting that the original cost target was before the T-Mobile deal, Ergen said Dish is also optimistic that the company won't need to finance as much as previously thought to get the build done.
Also unchanged is Dish's anticipated wireless expenditures for 2020 – between $250 million to $500 million, though the total will likely be closer to the lower end of that range.
- Dish sheds 40,000 satellite TV subs, 56,000 Sling TV subs in Q2
- Dish buys Ting, scores mobile management deal with Tucows
- Dish chooses VMware's cloud for 5G
- Dish sizes up launch of a 5G network core in at least one market in 2020
- Rural focus keeps Dish satellite TV losses in check
— Jeff Baumgartner, Senior Editor, Light Reading