Dish Network shares fell to a new 52-week low Friday after the satellite giant reported larger than expected subscriber losses and a big decline in wireless customers as it gears up for a much anticipated Analyst Day next week.
Dish shares were trading as low as $23.41 on May 6, a new 52-week low and down 14.8% or $4.07 per share.
The decline comes days before Dish is scheduled to hold its Analyst Day on May 10 in Las Vegas, offering analysts a deeper look into the satellite giant’s wireless strategy.
Dish lost about 462,000 satellite and vMVPD subscribers in Q1, more than double the 230,000 it lost in the prior year. Satellite losses of 228,000 customers were significantly higher than consensus estimates of a loss of 140,000 subscribers. Sling TV lost 234,000 subscribers, nearly five times higher than the 53,000 losses most analysts expected, and most likely driven by a $5 per month price increase for the service in January.
Also: Sling TV Loses Over 230K Subscribers in Q1 Amid $5 Price Hike
In a research note, MoffettNathanson senior analyst Craig Moffett wrote that Sling TV ended the period with 2.25 million customers, its lowest point since 2017.
“There was a time when Sling TV was to become the lifeboat for satellite TV,” Moffett wrote. “That lifeboat is taking on water.”
In the retail wireless business, mainly its Boost Mobile prepaid offering, Dish lost 343,000 customers, again double the losses of the prior year and well above analysts’ consensus estimates of a loss of 181,000 customers. While Dish is focusing on building its own 5G wireless network — it activated its first market (Las Vegas) earlier this week after a long delay — the prepaid business was supposed to help fund the broader wireless efforts and serve as a pipeline of potential customers for the 5G offering. Now that appears to be less and less likely.
Prepaid wireless losses are expected to be heavier going forward -- the Q1 results did not include the shut down of its 3G offering, which began on the last day of the quarter, although some customers likely cancelled service before the deadline.
Moffett added in his report that the decline of the satellite TV and prepaid wireless business is especially concerning because they were supposed to be a source of cash and potential new subscribers for the standalone postpaid wireless offering.
“That is, the retail businesses of today were to be the springboard to the network business of tomorrow,” Moffett wrote. “The reality is that Dish’s retail satellite TV business is losing subscribers, revenues, and EBITDA (the rate of decline in Sling TV subscribers was a particular shock), and their retail Wireless business isn’t just losing subscribers (rapidly), its EBITDA has actually turned negative.”
The main thing is to get the network up and operating, start to put water through the pipes, make sure that we see how it works.”
— Charlie Ergen, Dish chairman
Dish is under the gun to make its wireless network available to 20% of the U.S. by the end of June, a deadline the company said it is on track to make. On a conference call with analysts, Dish chairman Charlie Ergen noted that Dish doesn’t have to offer a fully robust service in June, adding that the federal requirement is that it offers data service to 20% of the country.
“It’s not going to be as robust as we’d like,” Ergen said. “The main thing is to get the network up and operating, start to put water through the pipes, make sure that we see how it works.”
Dish has proposed to build a wireless network based on ORAN (open radio access network) technology, which it believes is not only less costly than incumbent wireless networks, but more efficient and higher quality.
“Ultimately our ability to compete is going to be the quality of the network,” Ergen said, again pointing to its unique architecture. “It’s a modern network in a modern world.” ▪️
