Dish Networks is back in the news, but not for great reasons. The stock plunged 37% to 25-year lows today, let’s see why. 👇
The satellite TV and wireless services company surprised investors with a third-quarter loss, as pay-TV and wireless subscribers declined. Its net pay-TV subscribers fell by 64,000, while retail wireless subscribers fell by 225,000. Average revenue per pay-TV users rose 3.1% YoY to $105.25, and Dish TV churn rose from 1.53% last year to 1.58% this quarter. 📊
As a result, its $0.26 per share loss was well below last year’s $0.65 in earnings and analyst consensus of $0.11. And revenues tumbled 9.5% YoY to $3.70 billion, lagging analyst estimates of $3.82 billion.
Additionally, the company announced it’s selling its spectrum assets and roughly 120,000 prepaid mobile subscribers in Puerto Rico and the U.S. Virgin Islands to Liberty Latin America. It plans to use the ~$256 million in cash to focus on its U.S. wireless business, which has been struggling to keep pace. 💰
The company is expected to merge with EchoStar Group ($SATS) by the end of the year. It plans to appoint EchoStar CEO Hamid Akhavan as CEO of Dish Networks on November 13th, with current CEO Erik Carlson remaining on the board of directors until the merger closes. EchoStar shares plummeted 31% today after its results also came in well below analyst expectations. 🤝
It appears both companies are having similar issues in keeping subscribers. That tends to be an issue with legacy providers in a highly competitive space that’s experienced a lot of disruption over the last decade. Based on the action in these stocks, analysts and investors are clearly worried that combining the two companies will not be enough to compete with the likes of Verizon and AT&T.
As we can see from the 20-year total return chart below, investors in both stocks have had a rough ride and are likely sitting deep in negative territory at current levels. 😬
Lastly, since we’re talking telecom news, we should include Telecom Italia selling its fixed-line network to U.S. private equity firm KKR for more than $20 billion. It’s part of the former monopoly’s plan to reduce an increasingly unmanageable amount of debt (25 billion euros). 💶