Boost Infinite Launch 'Not Optimized'; EchoStar Plans Fixes

The 2023 nationwide launch of EchoStar's Boost Infinite postpaid mobile service has stumbled, CEO Hamid Akhavan said Friday. In an earnings call -- the first since EchoStar acquired Dish Network (see 2401020003) -- Akhavan said the company is looking at assets, including its spectrum holdings, to raise funds to meet a major debt obligation this fall. EchoStar announced Q4 2023 results after the market's close Thursday.

EchoStar won't exercise its option to purchase T-Mobile's 800 MHz spectrum licenses, it said in an SEC filing, because it wasn't able to reach a financing agreement. The option expires April 1. EchoStar said it took a $1.6 billion non-cash hit in the reduction of the option's value.

Akhavan said there was stronger potential subscriber interest in Boost Infinite than actual activations as EchoStar "didn't have the right system" for getting them activated. "Our entry was not ... optimized, and we will fix that this year," he said. Launching any mobile service "is a transition year," Akhavan said. The company said it lost wireless subs in 2023 despite Boost Infinite's nationwide launch. It finished the year with about 7.4 million wireless subs, down from 8 million at 2022's end.

Akhavan said EchoStar's postpaid wireless goal is "to ramp up significant positive momentum by the end of 2024 as we shore up our branding, marketing and operations." EchoStar lacks the marketing resources of the Big Three mobile wireless carriers and will focus on more-economical routes like local advertising instead of national, he said.

The combined company expects to eliminate $1 billion in costs this year, Akhavan said. Chief Financial Officer Paul Orban said EchoStar would pay debt due in March with cash on hand, but $2 billion in debt maturing in November will require outside financing. A pair of EchoStar debt swaps offered in January were unsuccessful (see 2402120007). Akhavan said EchoStar will look at its spectrum holdings as well as its Dish business as possible assets when trying to raise money to meet its November debt obligation. He said EchoStar "is in active discussions with numerous parties" about funding for November, and there is "significant inbound interest." Chief Operating Officer Paul Gaske said that while all areas of the company will be part of the $1 billion cost-cutting, the pay-TV business "is going to be taking the lion's share."

New EchoStar combined revenue was $17 billion for 2023, down from $18.6 billion in 2022, driven in large part by Dish subscriber losses, said Orban.

Its pay-TV business finished 2023 with about 8.5 million subscribers, including 6.5 million in its direct broadcast satellite business, down about 950,000 from 2022, said Video Services Group President Gary Schanman. He said multiple disputes with local broadcasters hurt sub numbers. This year, he said, should be "less disruptive." Schanman said the company's Sling streaming business finished 2023 with about 2.1 million subs, down some 280,000 year over year.

Gaske said the company's satellite connectivity business is increasingly focused on enterprise, with that revenue set to surpass consumer broadband this year. Its HughesNet consumer service ended 2023 with about 1 million subs, down roughly 225,000 year over year due to capacity limits and competition, he said. The high-throughput Jupiter-3 satellite, which went into service in late 2023, should help reverse that subscriber loss trend, Gaske said.

EchoStar Chairman Charlie Ergen, frequently a part of Dish Network earnings calls, wasn't on Friday's.

The latest quarterly numbers for EchoStar's wireless and satellite TV businesses "only add an exclamation point to what has been a years-long slide. Gradually, then suddenly," MoffettNathanson's Craig Moffett wrote in a note. He said trying to figure out the valuation of Dish's salvage value when it comes to its spectrum is challenging because spectrum auction results have been inflated in recent years owing to a wildcard bidder in the form of Dish. With Dish the seller rather than the buyer, plus the balance sheets of the three nationwide mobile carriers overburdened by years of spending on spectrum, questions arise about the proceeds a spectrum auction would generate, he said.