As the nuns said so musically in The Sound of Music: ‘How do you solve a problem like Maria?’ The same could be true of DISH Network, and the question would be ‘How do you truly value DISH?
Superficially, Charlie Ergen’s very mature DISH Network had a – sort of – reasonable Q2. Its subscriber revenues were down 5 per cent, $3.32 billion compared to $3.61 billion y-o-y. Total subscriber numbers were also well down at 10.65 million paying for Dish’s ‘full service’ and another 2.34 million taking its ‘lite’ on-line service Sling TV. Overall total was some 13 million, compared with last year’s 13.33 million.
This was the fourth straight quarter where subs numbers were down, and Dish is having to work ever harder to acquire new subs (MoffettNathanson says Dish’s Subscriber Acquisition Costs are about $946. A year ago SAC was $806, and below $700 back in 2016).
Company chairman Charlie Ergen, whether with his EchoStar hat on, or supervising DISH Network has always had several ‘Plan B’ options for the businesses, and CEO Erik Carlson admitted as much on the firm’s analyst conference call on July 29. Carlson said “[At DISH] we’re working with the time horizon that’s approximately five to 10 years out. We’ve organized the business in a way that lets us take advantage of not only our present opportunity, but it sets us up for prosperous future. In DISH, we’ve got a legacy business, it really serves as our cash engine, it remains the source of opportunity in a variety of the distinct markets, including small-town America, commercial markets, premium markets, and really value the choice and technology that DISH delivers.”
Carlson said that wireless would be DISH’s “fourth wave” and a strong participant in the upcoming 5G technology. First, however, DISH needs to win the Federal Communications Commission’s support for its 5G plans.
DISH is planning its preliminary ‘NB-IoT’ wireless service and says it could invest $10 billion on a nationwide system, with the fist $1 billion spent in the next 2 years or so. The timing is not accidental. Ergen told analysts the company was at something of an inflection point: “The big paradigm shift in 5G, not the market in 5G that you’re going to hear about , but the real paradigm shift in 5G is Release 16 from 3GPP [Third Generation Partnership Project standardization organisation], which for standalone network is December of 2019, that’s when the specification comes out. It allows you to do three things that you can’t do in 5G today; it allows massive broadband; it allows massive IoT connectivity; and it allows the network to have low latency, so very, very low latencies.”
“Our competitors will start building hybrid networks, but they’re not going to get to a full 5G platform without ripping out what they already have. And they have hundreds of millions of customers with phones. So the phone customer is not going to see that much difference in latency. So that some of the things that we’re going to do aren’t going to be that attractive from a cost to benefit ratio to the incumbents. But if we want to lead in 5G, we want to lead in artificial intelligence, virtual reality, autonomous vehicles,, smart cities, you’re going to need a more modern network for that and we’ll play big part in that.”