Dish's 5G revenue hopes hard to swallow

Dish Network believes it could generate just over $18 billion in revenues next year, and could grow that figure to over $41 billion by 2033. Meaning, the company believes it will ultimately cash in on the nationwide 5G network it is building.

According to an EchoStar SEC filing, the figures are "based on assumptions that Dish Network's management believed to be reasonable at the time of such preparation."

The figures were presented by Dish to EchoStar as part of their merger negotiations. Those negotiations started in March and culminated in August when Dish and EchoStar announced plans to combine their operations. The companies hope to close their merger later this year.

Specifically, here are Dish's revenue expectations for the next decade:

"Dish Network does not as a matter of course publicly disclose long-term projections as to future performance, revenues, earnings or other results due to, among other reasons, the inherent uncertainty and subjectivity of the underlying assumptions and estimates, especially in respect of projections covering extended periods of time. However, in connection with the Dish Network Special Committee's evaluation of the [EchoStar] merger, Dish Network's management prepared and provided to the Dish Network Special Committee and its financial advisor certain unaudited prospective financial information regarding Dish Network's anticipated future operations as a standalone company without giving effect to the merger," explained EchoStar in its filing, in discussing its negotiations with the Dish Network Special Committee.

Related:Dish, AT&T unveil aggressive iPhone promotions

Analysts 'miles below' Dish's forecast

The expectations are noteworthy considering investors have been fleeing Dish for the better part of 2023 over fears the company's 5G gambit will collapse. For the past two years, Dish has been building a 5G network across large parts of the US.

Further, the financial analysts at New Street Research said they were having trouble understanding Dish's financial expectations through 2033.

"We can't get to management's forecast for 2024 and later. Part of the gap may just be handset accounting (we will need the company's help to figure this out)," they wrote in a recent note to investors. 5G operators like Dish typically must purchase the phones they expect to sell to their customers, and the accounting metrics for those handsets can often be a gray area for analysts.

Related:Charlie Ergen explains why he's merging Dish Network and EchoStar

Regardless, the New Street analysts made some conclusions on Dish's strategy based on its financial forecasts. For example, they said the company's expectations appear to reflect a significant increase in spending on its iPhone promotion. 

But, broadly, the analysts argued that they couldn't understand the reasoning behind Dish's revenue calculations.

"Our forecast is miles below management on revenues and EBITDA [earnings before interest, taxes, depreciation and amortization] from 2024 onwards," they wrote. "We are most puzzled by the gap in 2024. We don't think management is assuming much 5G network revenue in that year. We suspect much of the growth in the gap later in the forecast is attributable to management being more optimistic on 5G network revenue than we are at this stage."

However, they concluded that if Dish is successful in gaining new 5G customers, that could put additional pressure on existing players in the space ranging from T-Mobile to AT&T, Comcast and Charter Communications. They noted that Verizon would be "most affected because they have the highest share of industry gross [customer] adds."