Ergen starts fiscal manoeuvres
January 11, 2024
Charlie Ergen has been busy mapping out his chess-type strategy for his combined Dish Network and EchoStar businesses. Now trading under the ‘Dish’ banner, Ergen has spun off a batch of his terrestrial spectrum licences into a new subsidiary and this move helped rocket Dish’s share price by an impressive 41 per cent on January 10th.
EchoStar said it was also carrying out a strategic examination of its options in order to address the escalating competition from larger US-based (cellular) operators.
The new subsidiary, EchoStar Wireless Holding, now holds various licences (including some granted in the AWS-4 auction, H-Block, CBRS, C-Band – Cheyenne, 12 GHz, LMDS, 24 GHz, 28 GHz, 37 GHz, 30 GHz and 47 GHz). Not all of Dish’s holdings are transferred. Dish is holding on to other valuable wireless spectrum licences, such as that in the 600 MHz, 700 MHz, 3.45 GHz, and AWS-3 auctioned bands, with 700 MHz and AWS-3 remaining unencumbered.
EchoStar said the asset moves provided “incremental strategic, financial and operating flexibility.” The company added that the transactions furthered the ambition of the merger completed last week, and to realise the “synergistic capabilities of the combined company, while also providing it with optimised strategic and financing flexibility.”
Hamid Akhavan, President/CEO of EchoStar, said the spectrum transfer positions EchoStar optimally to execute its strategic goal of becoming the premier provider of terrestrial mobile, satellite connectivity and content services.
However, not all of EchoStar’s moves were wholly welcomed.
“In the absence of explanations from the company itself, we’re left to try to figure it out on our own – but what is most important here is that the assets simply aren’t being divided up in a way that would facilitate a sale,” analysts at MoffettNathanson, a frequent sceptic of Ergen, said in a note. “What seems much more likely is that the moves are a precursor to a new financing transaction, or perhaps a securitisation.”