EchoStar Corp (SATS) Q1 2025 Earnings Call Highlights: Navigating Challenges with Wireless ...

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Sat, May 10, 2025, 1:07 AM 4 min read

Revenue: Approximately $3.9 billion in Q1, down 3.6% year over year.
OIBDA: $400 million in Q1, a decrease of $17 million or approximately 15% year over year.
Operating Free Cash Flow: Positive $77 million in Q1.
Free Cash Flow (including debt service): Negative $172 million, an improvement of $55 million compared to the prior year.
Total Cash and Marketable Securities: $5.4 billion at the end of Q1, a decrease of $464 million compared to year-end.
Wireless Revenue: Increased by 6.4% to $973 million in Q1.
Pay-TV Revenue: Decreased by 6.9% to $2.5 billion in Q1.
BSS Revenue: Decreased by 3.1% to $371 million in Q1.
Wireless Subscribers: Increased to approximately 7.15 million.
Pay-TV Subscribers: DISH TV finished the quarter with approximately 5.5 million subscribers.
Churn Rate: DISH TV churn reduced to 1.36% from 1.53% year over year.
Pay-TV ARPU Growth: Year-over-year increase of over $3 or 3%.
Capital Expenditures: $378 million in Q1, including capitalized interest.
5G Network Sites: Over 24,000 5G sites on air, meeting FCC requirements ahead of schedule.

Warning! GuruFocus has detected 6 Warning Signs with SATS.

Release Date: May 09, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

EchoStar Corp (NASDAQ:SATS) reported strong wireless performance with 150,000 net subscriber additions in Q1 2025, a significant improvement from an 81,000 net loss in the same period of 2024.
The company expanded its prepaid and postpaid offerings, contributing to subscriber growth and improved churn rates by 7.2% year over year.
EchoStar Corp (NASDAQ:SATS) increased its wireless subscribers to approximately 7.15 million, with an increase in ARPU, indicating improved subscriber quality.
The Hughes business made progress in the enterprise domain, with universal compatibility of in-flight connectivity terminals and expanded contracts with major airlines like Delta.
EchoStar Corp (NASDAQ:SATS) achieved a positive operating free cash flow of $77 million in Q1 2025, demonstrating disciplined cost management and growth in wireless and Hughes enterprise businesses.

Negative Points

Revenue decreased by 3.6% year over year to approximately $3.9 billion, primarily due to fewer subscribers in the Pay-TV segment.
OIBDA decreased by $17 million year over year, driven by increased marketing expenses in the wireless segment and decreased OIBDA from the Pay-TV segment.
Free cash flow, including debt service, was negative $172 million in Q1 2025, despite an improvement compared to the prior year.
The Pay-TV segment experienced a 6.9% revenue decline due to a lower average subscriber base, despite an increase in ARPU.
Broadband and satellite services revenue decreased by 3.1%, attributed to lower sales of broadband services to consumers and enterprise customers.

Q & A Highlights

Q: Strong subscriber results in wireless, but success-based OpEx is pressuring EBITDA. What are the potential cost levers within that segment, and can you elaborate on your LEO strategy? A: Hamid Akhavan, President and CEO, explained that improving the economics involves adding a significant majority of customers directly on their own network, which reduces costs. John Swieringa, President of Technology and COO, added that they are focusing on compatible devices and expanding their distribution. Regarding LEO, EchoStar is preparing to be a leading provider of global direct-to-device connectivity, but they are not making announcements until they have substantial developments.

Q: As you've ramped net adds in wireless, what is resonating most in the market, and can you improve further from the 150,000 level? A: Hamid Akhavan noted that EchoStar offers some of the most attractive market offers, leading to reduced churn and significant digital sales contributions. The first quarter is typically strong due to tax season, and while they aim for positive net adds throughout the year, they are cautious about making forward projections.

Q: Can you provide clarity on the Hughes secured bond buyback and the issuance of new spectrum notes? A: Hamid Akhavan stated that the bond buyback is part of a strategy to utilize cash effectively, considering their securities are undervalued. The $150 million raised from spectrum notes was to satisfy an obligation, and both actions are unrelated.

Q: Are there plans to invest more in distribution and advertising to drive growth, especially with competitors like Comcast being aggressive? A: Hamid Akhavan confirmed that EchoStar is working on expanding distribution channels, including digital and national retail, to drive growth. They are focused on developing new routes to market and will reveal more towards the end of the year.

Q: Can you elaborate on EchoStar's LEO aspirations and whether you will pursue direct-to-device communications with your own constellation? A: Hamid Akhavan emphasized that EchoStar is uniquely positioned with spectrum rights and capabilities to lead in direct-to-device communications. They are timing their satellite launches to coincide with the availability of compatible devices, ensuring a robust business case. While they can operate independently, they are open to partnerships if beneficial.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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