Dish Network said it will meet a Federal Communications Commission-mandated June deadline for reaching 70% of the U.S. population with a new 5G wireless network, an accomplishment that avoids the company having to pay heavy fines and give up its acquired spectrum licenses.
“We’re not spiking the football yet, but we’re on track. We don’t expect to pay fines,” Dish chairman Charlie Ergen told equity analysts during Dish Network’s fourth-quarter earnings call Thursday.
Ergen described reaching the 70% threshold as a "milestone," while adding, "We don't want to take any chances with [the FCC] taking our spectrum back.
Also read: Dish’s Ergen Declares Local Broadcast TV the 'Newspaper of This Decade'
“We’re excited to enter the really lucrative side of the wireless business, the consumer side,” he added.
Ergen compared Dish's pivot from satellite-based pay TV distribution to postpaid 5G wireless provision to the company's entrance into the satellite-TV market 30 years ago.
“Our network’s gonna start generating a lot of cash,“ he said. “It’s so déjà vu for me. Back in the DBS business, once we launched our satellites, we had a period of time where we had to work out the kinks. And once we did that, we started to generate a lot of cash. It's like a slot machine. You put a dollar in and get two dollars back every time you got a customer.”
Dish's stock price was surging around 5% Thursday afternoon following Dish's earnings call.
Still, equity analysts are girding investors on the concept that Dish still faces a long grind to get to that magic moment of free-cash-flow Valhalla with consumer wireless.
In a note to investors Thursday morning headlined, “Dish Network Q4 2022: Another Hole in the Bucket,” MoffettNathanson principal and senior analyst Craig Moffett noted Dish satellite TV and virtual pay TV service Sling TV are still losing customers faster than Dish can grow ARPU.
Meanwhile, Dish's Boost-branded prepaid wireless business is also now shrinking, down 6.7% in customers in 2022.
Less cash is coming in at a time when Dish capex is spiking again due to its 5G buildout — capital expenditures reached a record $865 million in the fourth quarter.
“The term ‘burn rate’ is rarely associated with 30-year-old (ish) companies,’ Moffett noted.
Barring a decision to sell its spectrum and its nascent wireless business, “there is no obvious way out of this box other than to plow forward, borrow even more and hope against hope that the cash drain from wireless can eventually turn into cash generation,” Moffett added. “Unfortunately, that will likely take many, many years, if it is achievable at all.” ■
