Charlie Ergen: “Sat industry must merge”

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EchoStar chairman Charlie Ergen seemed to bear no ill-will towards his takeover target Inmarsat in his comments made during the company’s Q2 results presentation.

However, he told analysts that “scale matters” and that just about every satellite operator was “sub-scale” and explained that almost all the satellite players were suffering video markets which have been in decline for some time. He argued bluntly that the satellite telecoms sector would need to see mergers to survive.

“There are opportunities for companies to work together to get scale. I am very positive about where satellites can go, but not any one company y gets there very well by itself, including EchoStar. Our Board encouraged us to look at different things. Inmarsat was one, but there are other opportunities out there.

Ergen added that satellite communications is going through a pretty fundamental paradigm shift, with much lower launch costs which helped [projects] such as LEO and MEO satellites into an economic model that a few years “just didn’t make sense”.

As to EchoStar’s results, consolidated revenues of $526 million (net income was $77.2 million). The company’s Hughes broadband division had 1.298 million subscribers and enjoyed revenues of $426.3 million (up 17.5 percent), with EchoStar Satellite Services seeing revenues of $95.4 million (down 3 percent). EchoStar is sitting on cash and equivalent reserves of $3.4 billion.


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