EchoStar shares slide 7% as the company continues to see subs exit

EchoStar Corporation (SATS) released its earnings report for the fourth quarter of the fiscal year, ending in December 2023. EchoStar Corporation is a renowned provider of technology, networking services, television entertainment, and connectivity. Its brands include EchoStar, Boost Mobile, Boost Infinite, Sling TV, DISH TV, Hughes, HughesNet, HughesON, and JUPITER. The company offers a wide range of solutions to consumers, enterprises, operators, and government entities globally.

The company experienced a significant loss during this period, reporting a loss of $7.48 per share, which included charges discussed below. Revenues saw a substantial increase, rising by 732.2% year-over-year to $4.16 billion, beating the FactSet Consensus estimate of $3.96 billion.

In 2023, EchoStar Corporation faced a net loss of $1.70 billion, in stark contrast to the net income of $2.48 billion recorded in the previous year. The primary cause of this loss was a noncash impairment to goodwill, amounting to approximately $758 million, and an adjustment to the carrying value of the 800 MHz purchase option, which totaled roughly $1.8 billion. As a result, diluted loss per share for 2023 amounted to $6.28, compared to earnings per share of $8.05 in 2022. When excluding the tax-affected impact of the goodwill impairment and the 800 MHz adjustment, the net income attributable to EchoStar in 2023 would have been approximately $361 million.

The company's consolidated revenue for the fourth quarter totaled $4.16 billion, down from $4.53 billion in the same quarter of the previous year. This decline in revenue was primarily attributed to subscriber declines, with the Pay-TV segment experiencing the most significant impact.

During the fourth quarter, EchoStar Corporation faced a net loss attributable to the company amounting to $2.03 billion, in contrast to the net income of $984 million recorded in the same period of the previous year. Similar to the annual results, the net loss in the fourth quarter was mainly due to a noncash impairment to goodwill, totaling approximately $758 million, and an adjustment to the carrying value of the 800 MHz purchase option, which amounted to approximately $1.6 billion. Diluted loss per share for the quarter stood at $7.48, while earnings per share in the year-ago quarter were $3.21.

EchoStar Corporation's consolidated OIBDA for the fourth quarter was negative $370 million, compared to a positive OIBDA of $735 million in the same quarter of the previous year. The decrease in OIBDA was primarily driven by the noncash impairment to goodwill and the subscriber declines already mentioned.

Throughout the fourth quarter, the company experienced a decrease in net Pay-TV subscribers, with approximately 314,000 subscribers lost compared to approximately 268,000 in the same quarter of the previous year. EchoStar Corporation closed the quarter with a total of 8.53 million Pay-TV subscribers, including 6.47 million DISH TV subscribers and 2.06 million SLING TV subscribers. The increase in net Pay-TV losses was primarily driven by higher DISH TV churn rate and lower gross new DISH TV subscriber activations. However, net SLING TV subscriber losses decreased due to lower subscriber disconnects as a result of the company's focus on acquiring higher-quality subscribers.

Regarding Retail Wireless subscribers, EchoStar Corporation experienced a decrease of approximately 123,000 in the fourth quarter, compared to a net decrease of 25,000 in the same quarter of the previous year. The company closed the quarter with 7.38 million Retail Wireless subscribers. The increase in net losses stemmed from lower gross new Retail Wireless subscriber activations. However, the Retail Wireless churn rate decreased due to the company's efforts to acquire and retain higher-quality subscribers.

In the Broadband segment, EchoStar Corporation faced a decrease of approximately 59,000 net subscribers in the fourth quarter, compared to a decrease of 57,000 in the same quarter of the previous year. The company closed the quarter with 1.00 million Broadband subscribers. The increase in net subscriber losses was primarily driven by capacity limitations, competitive pressure from satellite-based competitors and other technologies, and a more selective customer screening process. However, the launch of the EchoStar XXIV satellite, also known as Jupiter 3, in December 2023 is expected to bring additional broadband capacity and play a crucial role in the Broadband and Satellite Services segment business.

In conclusion, EchoStar Corporation's fourth-quarter earnings report highlights a substantial loss compared to the previous year. However, the company experienced significant revenue growth. The decline in consolidated revenue was primarily driven by subscriber losses, particularly in the Pay-TV segment. Although the company faced net subscriber losses in the Pay-TV, Retail Wireless, and Broadband segments during the fourth quarter, it is working towards acquiring higher-quality subscribers and improving churn rates. The launch of the EchoStar XXIV satellite is expected to provide additional broadband capacity and contribute to the future success of the Broadband and Satellite Services segment