Dish merges with EchoStar, buying time for Ergen’s mobile empire
Dish Network Corp. and EchoStar Corp. have completed their merger, reuniting Charlie Ergen’s satellite empire once again.
The deal, which closed on Dec. 31, is key to Ergen’s plan to transition Dish away from the dwindling pay-TV business and toward wireless services.
It could challenge the likes of Verizon Communications Inc., T-Mobile U.S. Inc. and AT&T Inc.
Dish, which had accrued significant debt, will now have access to more cash and time to expand its 5G network buildout and mobile and broadband offerings, including fixed home wireless and Boost Infinite, a low-cost mobile service.
Ergen, 70, was chairman and co-founder of both companies before the merger.
He will be executive chairman of the new combined firm.
Hamid Akhavan, 62, head of EchoStar since March 2022, took over as president and CEO of both companies in November.
Dish had saddled itself with $24.6 billion in short- and long-term debt as it struggled to transition from a legacy pay-TV business, according to company data compiled by Bloomberg.
Its TV subscribers have dropped 37% in a decade to 8.8 million in the third quarter this year from 14 million in the same period in 2013.
The company was effectively cut off from the debt market, and analysts have estimated that it needs as much as $16 billion in new capital between 2024 and 2026 to cover spending, wireless costs and address upcoming debt maturities.
Dish’s notes are now convertible into EchoStar shares as part of the merger, according to a company filing Tuesday.
The all-stock transaction was announced in August and brings Dish under control of EchoStar, which runs a satellite network.
The company’s growth relies heavily on gaining share in 5G as its pay-TV subscribers steadily decline, and it may struggle to find a profitable niche in a sector dominated by wireless giants, Bloomberg Intelligence Senior Industry Analyst John Butler said in a note.
Ergen likely will seek to tap EchoStar’s $1.9 billion in cash and estimated $265 million in free cash to finance the build-out, according to Bloomberg Intelligence.
EchoStar, which provides satellite communications through its Hughes Network Systems and EchoStar Satellite Services businesses, was previously owned by Dish and spun off in 2008.
The deal encountered little federal scrutiny.
Since Ergen led both Dish and EchoStar, the transaction brings “no substantial change of ownership or control,” the Federal Communications Commission said as it cleared the deal on Dec. 7.