Amid the closing of key financial transactions, EchoStar removed a disclosure raising doubts about its ability to continue as a going concern. However, DirecTV's proposed acquisition of Dish's video business has hit a bump.
Amid the closing of some critical financing, EchoStar has removed a prior disclosure that raised doubts about the company's ability to continue as a going concern as it inched toward a potential bankruptcy.
EchoStar made that going concern disclosure in March when near-term debt maturities and the company's cash burn were a major source of concern. That has been largely obviated via a string of transactions that gave the company some much-needed financial runway, including $2.5 billion in standalone financing and the raise of $5.1 billion in spectrum-backed financing. The successful completion of today's transactions will put the company in position to move ahead with its national open RAN 5G network buildout, EchoStar announced today.
What's still outstanding is a proposed restructuring required for EchoStar to move ahead with a proposed sale of its video business (including Sling TV) to DirecTV for $1 and the assumption of $9.75 billion of debt. EchoStar's Dish DBS Corp. unit recently sweetened that debt exchange offer, but it was shot down by Dish bondholders. That puts the merger of the Dish and DirecTV deal in jeopardy.
"Last night, Dish creditors said: 'no.' 'No' to the latest and ever-so-slightly-sweetened proposed cramdown. 'No' to the DirecTV deal. And 'no' to a settlement of the ongoing litigation over EchoStar’s reshuffling of assets into new credit silos," MoffettNathanson analyst Craig Moffett summarized in a research note (registration required) issued today.
"The 'simplest' path to a resolution would be for TPG, which in the current plan would be the owner of the combined DirecTV/Dish Network, to sweeten the deal. But that doesn’t seem likely, in our view," Moffett explained.
A committee of Dish lenders called the deal one of the largest "engineered at the expense of creditors," Bloomberg reported. "This group has roundly and resolutely rejected the latest proposed exchange offer," stated the letter from the committee, according to Bloomberg.
The acceptance deadline was 5 p.m. ET today.
"We are pretty confident the current offer to bondholders will be rejected," New Street Research analyst Jonathan Chaplin said in a research note issued Tuesday afternoon.
EchoStar is confident it can continue with its plan even if the DBS debt exchange does not close.
"While we are hopeful that the DBS exchange will be successful, we now have a more robust foundation to operate and grow EchoStar's business independent of the exchange outcome," EchoStar President and CEO Hamid Akhavan said today on the company's Q3 2024 earnings call.
Even if the DBS exchange transaction does not close, "we do have a path forward" with cash available and from other sources, he added later. "We certainly can develop the business regardless of the developments that happen at DBS."
Here's a snapshot of Q3 results at EchoStar's various businesses.
Boost Mobile
Excluding losses tied to the demise of the Affordable Connectivity Program (ACP), EchoStar gained 62,000 retail wireless subscribers in Q3, giving it a grand total of 6.98 million. With ACP-related losses included, EchoStar shed 297,000 retail wireless subs.
Akhavan said EchoStar is now activating more than 50% of all new device sales on the company's own network. Its Boost business has also expanded a relationship with Apple that enables customers to purchase and activate Boost mobile service at Apple retail stores, via Apple.com and the Apple Store app.
EchoStar recently received FCC approval on an updated framework for its 5G network buildout. The Boost mobile network now covers more than 250 million Americans with 5G broadband, said John Swieringer, EchoStar's president of technology and COO.
Pay-TV
EchoStar shed 43,000 total pay-TV subscribers in Q3 as a better-than-expected gain of 145,000 subs at Sling TV were offset by a loss of 188,000 Dish satellite subscriber losses. EchoStar ended the period with 8.03 million pay-TV subs, comprising 5.59 million Dish satellite TV subs and 2.14 million Sling TV customers.
Satellite broadband
EchoStar's HughesNet unit lost 43,000 subs in Q3, lowering its total to 912,000. The company attributed the losses to the aforementioned end of the ACP along with increased, but apparently unfulfilled, demand for service plans tied to the recent activation of the company's high-capacity Jupiter 3 satellite.
Activated nearly a year ago, the geosynchronous orbit Jupiter 3 satellite packs more than 500 Gbit/s of capacity, which is being used to support downstream speeds up to 100 Mbit/s. Hughes also markets a low-latency offering, called "Fusion," that combines satellite and terrestrial mobile connectivity.
HughesNet is also exploring the burgeoning direct-to-device market, and has successfully tested it via satellites covering parts of North America and Europe.
Editor's note: The story has been updated with a reference to a Bloomberg report about Dish lenders rejecting the debt exchange offer and commentary from New Street Research.
You May Also Like
