filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Furthermore, our net Pay-TV subscriber additions, gross new DISH TV subscriber activations, and DISH TV churn rate may be negatively impacted if we are unable to renew our long-term programming carriage contracts. In the past, our net Pay-TV subscriber additions, gross new DISH TV subscriber activations, and DISH TV churn rate have been negatively impacted as a result of programming interruptions and threatened programming interruptions in connection with the scheduled expiration of programming carriage contracts with content providers. There can be no assurance that the removal of any channels will not have a material adverse effect on our business, results of operations and financial condition or otherwise disrupt our business. We cannot predict with any certainty the impact to our net Pay-TV subscriber additions, gross new DISH TV subscriber activations, and DISH TV churn rate resulting from programming interruptions or threatened programming interruptions that may occur in the future. As a result, we may at times suffer from periods of lower net Pay-TV subscriber additions or higher net Pay-TV subscriber losses.
RESULTS OF OPERATIONS – Pay-TV Segment
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024.
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | | | | | ||||
| | | March 31, | | Variance | |||||||
| Statements of Operations Data | 2025 | 2024 | Amount | % | |||||||
| | | (In thousands) | | | |||||||
| Revenue: | | | | | | | | | | | |
| Service revenue | | $ | 2,524,352 | | $ | 2,701,179 | | $ | (176,827) | | (6.5) |
| Equipment sales and other revenue | | | 14,375 | | | 25,399 | | | (11,024) | | (43.4) |
| Total revenue | | | 2,538,727 | | | 2,726,578 | | | (187,851) | | (6.9) |
| | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | |
| Cost of services | | | 1,556,636 | | | 1,664,445 | | | (107,809) | | (6.5) |
| % of Service revenue | | | 61.7 | % | | 61.6 | % | | | | |
| Cost of sales - equipment and other | | | 9,672 | | | 16,992 | | | (7,320) | | (43.1) |
| Selling, general and administrative expenses | | | 242,546 | | 289,631 | | (47,085) | | (16.3) | ||
| % of Total revenue | | | 9.6 | % | | 10.6 | % | | | | |
| Depreciation and amortization | | | 76,443 | | | 85,402 | | | (8,959) | | (10.5) |
| Total costs and expenses | | | 1,885,297 | | | 2,056,470 | | | (171,173) | | (8.3) |
| | | | | | | | | | | | |
| Operating income (loss) | | $ | 653,430 | | $ | 670,108 | | $ | (16,678) | | (2.5) |
| | | | | | | | | | | | |
| Other data: | | | | | | | | | | | |
| Pay-TV subscribers, as of period end (in millions) | | | 7.397 | | | 8.178 | | | (0.781) | | (9.6) |
| DISH TV subscribers, as of period end (in millions) | | | 5.503 | | | 6.258 | | | (0.755) | | (12.1) |
| SLING TV subscribers, as of period end (in millions) | | | 1.894 | | | 1.920 | | | (0.026) | | (1.4) |
| Pay-TV subscriber additions (losses), net (in millions) | | | (0.381) | | | (0.348) | | | (0.033) | | (9.5) |
| DISH TV subscriber additions (losses), net (in millions) | | | (0.183) | | | (0.213) | | | 0.030 | | 14.1 |
| SLING TV subscriber additions (losses), net (in millions) | | | (0.198) | | | (0.135) | | | (0.063) | | (46.7) |
| Pay-TV ARPU | | $ | 110.64 | | $ | 107.38 | | $ | 3.26 | | 3.0 |
| DISH TV subscriber additions, gross (in millions) | | | 0.046 | | | 0.079 | | | (0.033) | | (41.8) |
| DISH TV churn rate | | | 1.36 | % | | 1.53 | % | | (0.17) | % | (11.1) |
| DISH TV SAC | | $ | 1,149 | | $ | 1,054 | | $ | 95 | | 9.0 |
| Purchases of property and equipment, net of refunds (1) | | $ | 62,388 | | $ | 57,912 | | $ | 4,476 | | 7.7 |
| OIBDA | | $ | 729,873 | | $ | 755,510 | | $ | (25,637) | | (3.4) |
| * | Percentage is not meaningful. |
|---|
(1) Purchases of property and equipment, net of refunds includes satellite purchases during the three months ended March 31, 2025 and 2024 of $25 million and $30 million, respectively.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Pay-TV Subscribers
DISH TV subscribers. We lost approximately 183,000 net DISH TV subscribers during the three months ended March 31, 2025 compared to the loss of approximately 213,000 net DISH TV subscribers during the same period in 2024. This decrease in net DISH TV subscriber losses primarily resulted from a lower DISH TV churn rate, partially offset by lower gross new DISH TV subscriber activations.
SLING TV subscribers. We lost approximately 198,000 net SLING TV subscribers during the three months ended March 31, 2025 compared to the loss of approximately 135,000 net SLING TV subscribers during the same period in 2024. The increase in net SLING TV subscriber losses was primarily related to lower SLING TV subscriber activations due to our emphasis on acquiring higher quality subscribers and higher SLING TV subscriber disconnects in 2025. We continue to experience increased competition, including competition from other subscription video on-demand and live-linear OTT service providers, many of which are providers of our content and offer football and other seasonal sports programming direct to subscribers on an a la carte basis.
DISH TV subscribers, gross. During the three months ended March 31, 2025, we activated approximately 46,000 gross new DISH TV subscribers compared to approximately 79,000 gross new DISH TV subscribers during the same period in 2024, a decrease of 41.8%. This decrease in our gross new DISH TV subscriber activations was primarily related to lower marketing expenditures, the lack of demand and shifting consumer behavior, as well as increased competitive pressures, including, but not limited to, live-linear OTT service providers, aggressive short term introductory pricing and bundled offers combining broadband, video and/or wireless services and other discounted promotional offers and direct-to-consumer offerings by certain of our programmers. Our gross new DISH TV subscriber activations continue to be negatively impacted by an emphasis on acquiring higher quality subscribers.
DISH TV churn rate. Our DISH TV churn rate for the three months ended March 31, 2025 was 1.36% compared to 1.53% for the same period in 2024. Our DISH TV churn rate for the three months ended March 31, 2025 was positively impacted by our emphasis on acquiring and retaining higher quality subscribers. Our DISH TV churn rate continues to be adversely impacted by external factors, such as, among other things, cord cutting, shifting consumer behavior and increased competitive pressures, including, but not limited to, live-linear OTT service providers, aggressive marketing, bundled discount offers combining broadband, video and/or wireless services and other discounted promotional offers. Our DISH TV churn rate is also impacted by internal factors, such as, among other things, our ability to consistently provide outstanding customer service, price increases, our ability to control piracy and other forms of fraud and the level of our retention efforts.
Our net Pay-TV subscriber additions, gross new DISH TV subscriber activations and DISH TV churn rate have been negatively impacted as a result of programming interruptions and threatened programming interruptions in connection with the scheduled expiration of programming carriage contracts with content providers. We cannot predict with any certainty the impact to our net Pay-TV subscriber additions, gross new DISH TV subscriber activations and DISH TV subscriber churn rate resulting from programming interruptions or threatened programming interruptions that may occur in the future. As a result, we may at times suffer from periods of lower net Pay-TV subscriber additions or higher net Pay-TV subscriber losses.
We have not always met our own standards for performing high-quality installations, effectively resolving subscriber issues when they arise, answering subscriber calls in an acceptable timeframe, effectively communicating with our subscriber base, reducing calls driven by the complexity of our business, improving the reliability of certain systems and subscriber equipment and aligning the interests of certain independent third-party retailers and installers to provide high-quality service. Most of these factors have affected both gross new DISH TV subscriber activations as well as DISH TV subscriber churn rate. Our future gross new DISH TV subscriber activations and our DISH TV subscriber churn rate may be negatively impacted by these factors, which could in turn adversely affect our revenue.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Service revenue. “Service revenue” totaled $2.524 billion for the three months ended March 31, 2025, a decrease of $177 million or 6.5% compared to the same period in 2024. The decrease in “Service revenue” compared to the same period in 2024 was primarily related to lower average Pay-TV subscriber base, partially offset by an increase in Pay-TV ARPU, discussed below.
Pay-TV ARPU. Pay-TV ARPU was $110.64 during the three months ended March 31, 2025 versus $107.38 during the same period in 2024. The $3.26 or 3.0% increase in Pay-TV ARPU was primarily attributable to the DISH TV and SLING TV programming price increases. The DISH TV and SLING TV programming package price increases were effective in the third and fourth quarter of 2024.
Cost of services. “Cost of services” totaled $1.557 billion during the three months ended March 31, 2025, a decrease of $108 million or 6.5% compared to the same period in 2024. The decrease in “Cost of services” was primarily attributable to a lower average Pay-TV subscriber base, partially offset by higher programming costs per subscriber. Programming costs per subscriber increased during the three months ended March 31, 2025 due to rate increases in certain of our programming contracts, including the renewal of certain contracts at higher rates, particularly for local broadcast channels. “Cost of services” represented 61.7% and 61.6% of “Service revenue” during the three months ended March 31, 2025 and 2024, respectively.
In the normal course of business, we enter into contracts to purchase programming content in which our payment obligations are generally contingent on the number of Pay-TV subscribers to whom we provide the respective content. Our “Cost of services” have and will continue to face further upward pressure from price increases and the renewal of long-term programming contracts on less favorable pricing terms. In addition, our programming expenses will increase to the extent we are successful in growing our Pay-TV subscriber base.
Selling, general and administrative expenses. “Selling, general and administrative expenses” totaled $243 million during the three months ended March 31, 2025, a $47 million or 16.3% decrease compared to the same period in 2024. This change was primarily driven by a decrease in subscriber acquisition costs resulting from lower marketing expenditures and lower gross new DISH TV subscriber activations and a decrease in personnel costs.
Depreciation and amortization. “Depreciation and amortization” expense totaled $76 million during the three months ended March 31, 2025, a $9 million or 10.5% decrease compared to the same period in 2024. This change was primarily driven by a decrease in depreciation expense from equipment leased to new and existing DISH TV subscribers and the expiration of our Nimiq 5 finance lease in September 2024.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
DISH TV SAC. DISH TV SAC was $1,149 during the three months ended March 31, 2025 compared to $1,054 during the same period in 2024, an increase of $95 or 9.0%. This change was primarily attributable to a higher percentage of new receivers being activated on new subscriber accounts, higher commission costs due to our emphasis on acquiring higher quality subscribers and higher installation costs.
During each of the three months ended March 31, 2025 and 2024, the amount of equipment capitalized under our lease program for new DISH TV subscribers totaled $7 million.
To remain competitive, we upgrade or replace subscriber equipment periodically as technology changes, and the costs associated with these upgrades may be substantial. To the extent technological changes render a portion of our existing equipment obsolete, we would be unable to redeploy all returned equipment and consequently would realize less benefit from the DISH TV SAC reduction associated with redeployment of that returned lease equipment.
Our “DISH TV SAC” may materially increase in the future to the extent that we, among other things, transition to newer technologies, introduce more aggressive promotions or provide greater equipment subsidies. See further information under “Liquidity and Capital Resources – Subscriber Acquisition and Retention Costs.”
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Wireless Segment
Our Wireless segment business strategy is to expand our current target segments and profitably grow our Wireless subscriber base and commercialize and grow customer traffic on our 5G Network. We intend to grow our Wireless subscriber base by acquiring and retaining high quality subscribers with competitive offers, choice and outstanding customer service that better meet those subscribers’ needs and budget.
Our Wireless segment provides Wireless communication services and products. We currently offer our Wireless services for 5G VoNR to over 222 million Americans and for 5G broadband service to over 269 million Americans, as well as a competitive portfolio of wireless devices. We offer nationwide Wireless services to subscribers primarily under our Boost Mobile and Gen Mobile brands.
We are currently operating primarily as an MVNO as we continue to commercialize and grow customer traffic on our 5G Network. We are transitioning to an MNO as our 5G Network has become commercially available and we grow customer traffic on our 5G Network. We are currently activating Boost Mobile subscribers with compatible devices onto our 5G Network in markets where we have reached 5G VoNR. We currently offer a broad range of premium wireless devices on our 5G Network, including the Apple iPhone 15 and newer generation iPhones, as well as a wide selection of Samsung, Motorola and other premium devices. We have deployed 5G VoNR covering over 222 million Americans. Within our MVNO operations, today we depend in part on T-Mobile and AT&T to provide us with network services under the MNSA and NSA, respectively. As of March 31, 2025, we had 7.145 million Wireless subscribers.
Currently, we offer Wireless subscribers competitive consumer plans with no annual service contracts and monthly service plans including high-speed data and unlimited talk and text. We also offer a variety of value-added services, including, but not limited to, device payment and protection plans, international calling and text plans, and device financing arrangements for certain qualified subscribers.
ACP Subscribers. A portion of our Wireless subscriber base and revenue was comprised of subscribers who received benefits under the ACP program. The FCC began taking steps to wind down the ACP program and stopped accepting new applications and enrollments on February 7, 2024. Households enrolled in the ACP program continued to receive the benefit on their service through April 2024. In May 2024, households received a partial benefit and on June 1, 2024 the ACP program funding concluded and households no longer received their benefit. Although we implemented plans to retain and/or migrate these subscribers to lower priced service plans, these subscribers began deactivating in the second and third quarters of 2024. As of December 31, 2024, we had no Wireless ACP subscribers. Generally, ACP subscribers have lower Wireless ARPU than other Wireless subscribers and as a result, any loss of ACP subscribers had a nominal impact on pre-tax net income.
We have invested a total of over $30 billion in Wireless spectrum licenses. The $30 billion of investments related to Wireless spectrum licenses does not include $10 billion of capitalized interest related to the carrying value of such licenses. See Note 2 and Note 10 in the Notes to our Condensed Consolidated Financial Statements for further information. We continue to commercialize our Wireless spectrum licenses through the completion of our 5G Network. We have committed to the FCC to deploy a facilities-based 5G broadband network capable of serving increasingly larger portions of the U.S. population at different deadlines.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
We will need to raise additional capital in the future, which may not be available on favorable terms or at all, to fund the efforts described below, as well as, among other things, make any potential Northstar Re-Auction Payment and SNR Re-Auction Payment for the AWS-3 licenses retained by the FCC. There can be no assurance that we will be able to complete all build-out requirements or profitably deploy our Wireless spectrum licenses, which may affect the carrying amount of these assets and our future financial condition or results of operations. See Note 10 in the Notes to our Condensed Consolidated Financial Statements for further information.
Our Wireless spectrum licenses are subject to certain interim and final build-out requirements, as well as certain renewal requirements. In September 2024, the FCC conditionally granted our requests to extend the 5G deployment deadlines for certain of our Wireless spectrum licenses based on several commitments and in a January 10, 2025 filing to the FCC, we certified to meeting the accelerated buildout (Commitments #2 and #3 of the Extension Request) and the nationwide 80% coverage obligations (Commitment #1 of the Extension Request) due by December 31, 2024. Thus, pursuant to the Extension Request, the final deployment deadlines for the licenses subject to the Extension Request (listed in Appendix G) shall be extended to December 14, 2026. In addition, the final deployment deadlines for the licenses subject to the Extension Request (listed in Appendix G) shall be further extended to June 14, 2028 as long as we satisfy the remaining Extension Request commitments. See Note 10 in the Notes to our Condensed Consolidated Financial Statements for definitions and further details.
We may need to make significant additional investments or partner with others to, among other things, continue our 5G Network deployment and further commercialize, build-out and integrate these licenses and related assets and any additional acquired licenses and related assets, as well as to comply with regulations applicable to such licenses. Depending on the nature and scope of such activities, any such investments or partnerships could vary significantly. In addition, as we continue our 5G Network deployment, we have and may continue to incur significant additional expenses related to, among other things, research and development, wireless testing and ongoing upgrades to the wireless network infrastructure, software and third-party integration. As a result of these investments, among other factors, we will need to raise additional capital, which may not be available on favorable terms or at all. We may also determine that additional wireless spectrum licenses may be required for our 5G Network deployment, which will enhance our ability to compete effectively with other wireless service providers.
Competition. Wireless communication services is a mature market with moderate year over year organic growth. Competitors include, among others, providers who offer similar wireless communication services, such as talk, text and data. Competitive factors within the wireless communication services industry include, but are not limited to, pricing, market saturation, service and product offerings, customer experience and service quality. We compete with a number of national wireless carriers, including Verizon, AT&T and T-Mobile, all of which are significantly larger than us, serve a significant percentage of all wireless subscribers and enjoy scale advantages compared to us. Verizon, AT&T and T-Mobile are currently the only nationwide MNOs in the United States.
Additional primary competitors to our Wireless segment include, but are not limited to, Metro PCS (owned by T-Mobile), Cricket Wireless (owned by AT&T), Visible (owned by Verizon), Tracfone Wireless (owned by Verizon), Total Wireless (owned by Verizon) and other MVNOs such as Consumer Cellular, Mint Mobile (owned by T-Mobile), Spectrum Mobile and Xfinity Mobile.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
RESULTS OF OPERATIONS – Wireless Segment
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024.
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | | | | | ||||
| | | March 31, | | Variance | |||||||
| Statements of Operations Data | 2025 | 2024 | Amount | % | |||||||
| | | (In thousands) | | | |||||||
| Revenue: | | | | | | | | | | | |
| Service revenue | | $ | 809,607 | | $ | 804,270 | | $ | 5,337 | | 0.7 |
| Equipment sales and other revenue | | | 163,168 | | | 109,736 | | | 53,432 | | 48.7 |
| Total revenue | | | 972,775 | | | 914,006 | | | 58,769 | | 6.4 |
| | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | |
| Cost of services | | | 766,200 | | | 764,108 | | | 2,092 | | 0.3 |
| % of Service revenue | | | 94.6 | % | 95.0 | % | | | | ||
| Cost of sales - equipment and other | | | 349,245 | | | 289,542 | | | 59,703 | | 20.6 |
| Selling, general and administrative expenses | | | 272,394 | | | 223,852 | | 48,542 | | 21.7 | |
| % of Total revenue | | | 28.0 | % | 24.5 | % | | | | ||
| Depreciation and amortization | | | 307,238 | | | 281,672 | | | 25,566 | | 9.1 |
| Total costs and expenses | | | 1,695,077 | | | 1,559,174 | | | 135,903 | | 8.7 |
| | | | | | | | | | | | |
| Operating income (loss) | | $ | (722,302) | | $ | (645,168) | | $ | (77,134) | | (12.0) |
| | | | | | | | | | | | |
| Other data: | | | | | | | | | | | |
| Wireless subscribers, as of period end (in millions) | | | 7.145 | | | 7.297 | | | (0.152) | | (2.1) |
| Wireless subscriber additions, gross (in millions) | | | 0.657 | | | 0.580 | | | 0.077 | | 13.3 |
| Wireless subscriber additions (losses), net (in millions) ** | | | 0.150 | | | (0.081) | | | 0.231 | | * |
| Wireless ARPU | | $ | 37.89 | | $ | 36.69 | | $ | 1.20 | | 3.3 |
| Wireless churn rate | | | 2.83 | % | 3.05 | % | (0.22) | % | (7.2) | ||
| Purchases of property and equipment, net of refunds | | $ | 163,936 | | $ | 391,089 | | $ | (227,153) | | (58.1) |
| OIBDA | | $ | (415,064) | | $ | (363,496) | | $ | (51,568) | | (14.2) |
| * | Percentage is not meaningful. |
|---|
| ** | Includes Government subsidized subscribers. |
|---|
Wireless subscribers. We added approximately 150,000 net Wireless subscribers during the three months ended March 31, 2025 compared to the loss of approximately 81,000 net Wireless subscribers during the same period in 2024. The change in net Wireless subscribers primarily resulted from a lower Wireless churn rate, higher net Government subsidized subscribers and higher gross new Wireless subscriber activations compared to the same period in 2024. In addition, the three months ended March 31, 2024 was negatively impacted by net losses of Government subsidized subscribers as a result of the ACP program no longer accepting new applications and/or enrollments as of February 7, 2024. See “Wireless Segment – ACP Subscribers” for further information.
Wireless subscribers, gross. During the three months ended March 31, 2025, we activated approximately 657,000 gross new Wireless subscribers compared to approximately 580,000 gross new Wireless subscribers during the same period in 2024, an increase of 13.3%. This increase in gross new Wireless subscribers primarily resulted from higher marketing expenditures, new subscriber offers and promotions and growth in digital channels. Our gross new Wireless subscribers continue to be negatively impacted by our emphasis on acquiring and retaining higher quality subscribers and increased competitive pressures, including aggressive competitor marketing, discounted service plans and deeper wireless device subsidies.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Wireless churn rate. Our Wireless churn rate for the three months ended March 31, 2025 was 2.83% compared to 3.05% for the same period in 2024. Our Wireless churn rate for the three months ended March 31, 2025 was positively impacted by our emphasis on acquiring and retaining higher quality subscribers, partially offset by competitive pressures, including deeper wireless device subsidies.
Service revenue. “Service revenue” totaled $810 million for the three months ended March 31, 2025, an increase of $5 million or 0.7% compared to the same period in 2024. The increase in “Service revenue” compared to the same period in 2024 was primarily related to an increase in Wireless ARPU, discussed below, partially offset by a lower average Wireless subscriber base.
Wireless ARPU. Wireless ARPU was $37.89 during the three months ended March 31, 2025 versus $36.69 during the same period in 2024. The $1.20 or 3.3% increase in Wireless ARPU was primarily attributable to, among other things, a shift in subscriber plan mix to higher priced service plans and increased sales of value added services.
Equipment sales and other revenue. “Equipment sales and other revenue” totaled $163 million for the three months ended March 31, 2025, an increase of $53 million or 48.7% compared to the same period in 2024. The increase in “Equipment sales and other revenue” compared to the same period in 2024 was primarily related to an increase in units shipped and wireless devices with higher revenue per unit shipped due to unit mix. During the three months ended March 31, 2025, we shipped a higher percentage of devices that are compatible with our 5G Network and other devices that have a higher revenue per unit.
Cost of services. “Cost of services” totaled $766 million for the three months ended March 31, 2025, an increase of $2 million compared to the same period in 2024. The increase in “Cost of services” compared to the same period in 2024 was primarily attributable to an increase in lease expense on communication towers, transport and other related costs for our 5G Network, partially offset by a lower average Wireless subscriber base and lower network services costs per subscriber.
Cost of sales – equipment and other. “Cost of sales – equipment and other” totaled $349 million for the three months ended March 31, 2025, an increase of $60 million or 20.6% compared to the same period in 2024. The increase in “Cost of sales – equipment and other” compared to the same period in 2024 was primarily resulted from an increase in units shipped and wireless devices with higher costs per unit shipped due to unit mix, partially offset by higher vendor rebates. During the three months ended March 31, 2025, we shipped a higher percentage of devices that are compatible with our 5G Network and other devices that have a higher cost per unit.
Selling, general and administrative expenses. “Selling, general and administrative expenses” totaled $272 million during the three months ended March 31, 2025, a $49 million or 21.7% increase compared to the same period in 2024. This increase was primarily driven by higher marketing expenditures.
Depreciation and amortization. “Depreciation and amortization” expense totaled $307 million during the three months ended March 31, 2025, a $26 million or 9.1% increase compared to the same period in 2024. This change was primarily driven by an increase in depreciation and amortization expense related to 5G Network assets being placed in service during 2024. This increase was partially offset by a decrease in amortization expense from subscriber relationships related to the Boost Mobile acquisition in 2020, which became fully amortized during the second quarter of 2024.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Broadband and Satellite Services Segment
We are an industry leader in both networking technologies and services, innovating to deliver the global solutions that power a connected future for people, enterprises and things everywhere. We provide broadband services to consumer customers, which include home and small to medium-sized businesses, and satellite, multi-transport technologies and managed network services to enterprise customers, telecommunications providers, airlines and government entities, including civilian and defense. We have leveraged the EchoStar XXIV to deliver satellite services to unserved and underserved consumer markets in the Americas as well as enterprise, aeronautical and government markets.
We also design, provide and install gateway and terminal equipment to customers for other satellite systems. In addition, we design, develop, construct and provide telecommunication networks comprising satellite ground segment systems and terminals to mobile system operators and our enterprise customers. We offer a robust suite of integrated, multi-transport solutions to enable airline and airline service providers to deliver reliable in-flight network connectivity serving both commercial and business aviation.
Backlog
As of March 31, 2025, our Broadband and Satellite Services segment had approximately $1.6 billion of contracted revenue backlog. We define the Broadband and Satellite Services segment contracted revenue backlog as our expected future revenue under enterprise customer contracts that are non-cancelable, including lease revenue.
Competition
Our industry is highly competitive. As a global provider of network technologies, products and services, our Broadband and Satellite Services segment competes with a large number of telecommunications and satellite internet service providers.
In our enterprise markets, we compete against multiple categories of providers. In the managed services area, we compete against providers of satellite-based and terrestrial-based networks, including fiber optic, cable, wireless internet service and internet protocol-based virtual private networks (VPN), which vary by region. In the in-flight connectivity market, we compete against direct and indirect providers of in-flight WiFi services, such as ViaSat Communications, Inc., which is owned by ViaSat, Inc. (“ViaSat”) and Starlink Services LLC, which is owned by Space Exploration Technologies Corp. (“SpaceX”).
In our consumer broadband satellite technologies and internet services markets, we compete against traditional telecommunications and wireless carriers, other satellite internet providers, as well as fiber optic, cable and wireless internet service providers. Our primary satellite competitors in the North American consumer market are ViaSat and SpaceX. Both ViaSat and SpaceX have also entered the South and Central American consumer markets. Our principal competitors for the supply of satellite technology platforms are Gilat Satellite Networks Ltd, ViaSat and ST Engineering iDirect, Inc.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
RESULTS OF OPERATIONS – Broadband and Satellite Services Segment
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024.
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | | | | | ||||
| | | March 31, | | Variance | |||||||
| Statements of Operations Data | 2025 | 2024 | Amount | % | |||||||
| | | (In thousands) | | | |||||||
| Revenue: | | | | | | | | | | | |
| Service revenue | | $ | 276,944 | | $ | 317,120 | | $ | (40,176) | | (12.7) |
| Equipment sales and other revenue | | | 93,714 | | | 65,466 | | | 28,248 | | 43.1 |
| Total revenue | | | 370,658 | | | 382,586 | | | (11,928) | | (3.1) |
| | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | |
| Cost of services | | | 113,125 | | | 130,180 | | | (17,055) | | (13.1) |
| % of Service revenue | | | 40.8 | % | | 41.1 | % | | | | |
| Cost of sales - equipment and other | | | 81,734 | | | 56,634 | | | 25,100 | | 44.3 |
| % of Equipment sales and other revenue | | | 87.2 | % | | 86.5 | % | | | | |
| Selling, general and administrative expenses | | | 90,096 | | | 116,485 | | (26,389) | | (22.7) | |
| % of Total revenue | | | 24.3 | % | | 30.4 | % | | | | |
| Depreciation and amortization | | | 104,898 | | | 118,841 | | | (13,943) | | (11.7) |
| Total costs and expenses | | | 389,853 | | | 422,140 | | | (32,287) | | (7.6) |
| | | | | | | | | | | | |
| Operating income (loss) | | $ | (19,195) | | $ | (39,554) | | $ | 20,359 | | 51.5 |
| | | | | | | | | | | | |
| Other data: | | | | | | | | | | | |
| Broadband subscribers, as of period end (in millions) | | | 0.853 | | | 0.978 | | | (0.125) | | (12.8) |
| Broadband subscriber additions (losses), net (in millions) | | | (0.030) | | | (0.026) | | | (0.004) | | (15.4) |
| Purchases of property and equipment, net of refunds (1) | | $ | 32,103 | | $ | 70,611 | | $ | (38,508) | | (54.5) |
| OIBDA | | $ | 85,703 | | $ | 79,287 | | $ | 6,416 | | 8.1 |
| * | Percentage is not meaningful. |
|---|
(1) Purchases of property and equipment, net of refunds includes satellite purchases during the three months ended March 31, 2025 and 2024 of $1 million and $2 million, respectively.
Broadband subscribers. We lost approximately 30,000 net Broadband subscribers for the three months ended March 31, 2025 compared to the loss of approximately 26,000 net Broadband subscribers during the same period in 2024. The increase in net Broadband subscriber losses was primarily due to lower gross subscriber additions, partially offset by lower subscriber disconnects due to expanded satellite capacity and increased subscriber service satisfaction. We continue to experience increased competition from satellite-based competitors and other technologies.
Service revenue. “Service revenue” totaled $277 million for the three months ended March 31, 2025, a decrease of $40 million, or 12.7%, as compared to 2024. The decrease was primarily attributable to lower sales of broadband services to our North American and international consumer customers and our North American enterprise customers.
Equipment sales and other revenue. “Equipment sales and other revenue” totaled $94 million for the three months ended March 31, 2025, an increase of $28 million, or 43.1%, as compared to 2024. The increase was primarily attributable to higher hardware sales to our North American enterprise customers.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Cost of services. “Cost of services” totaled $113 million for the three months ended March 31, 2025, a decrease of $17 million, or 13.1%, as compared to 2024. The decrease was primarily attributable to lower costs of broadband services to our North American and international enterprise and consumer customers. Our “Cost of services” represented 40.8% and 41.1% of “Service revenue” during the three months ended March 31, 2025 and 2024, respectively.
Cost of sales – equipment and other. “Cost of sales – equipment and other” totaled $82 million for the three months ended March 31, 2025, an increase of $25 million, or 44.3%, as compared to 2024. The increase was primarily attributable to the corresponding increase in equipment revenue. Our “Cost of sales – equipment and other” represented 87.2% and 86.5% of “Equipment sales and other revenue” during the three months ended March 31, 2025 and 2024, respectively.
Selling, general and administrative expenses. “Selling, general and administrative expenses” totaled $90 million for the three months ended March 31, 2025, a decrease of $26 million, or 22.7%, as compared to 2024. The decrease was primarily attributable to lower costs to support the Broadband and Satellite Services segment and lower marketing expenditures. The three months ended March 31, 2024 was negatively impacted by higher bad debt expense.
Depreciation and amortization. “Depreciation and amortization” expense totaled $105 million for the three months ended March 31, 2025, a decrease of $14 million, or 11.7%, as compared to 2024. The decrease was primarily attributable to lower equipment and satellite depreciation expense.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
OTHER CONSOLIDATED RESULTS
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024.
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | | | | | ||||
| | | March 31, | | Variance | |||||||
| Statements of Operations Data | 2025 | 2024 | Amount | % | |||||||
| | | (In thousands) | | ||||||||
| Operating income (loss) | | $ | (88,132) | | $ | (15,244) | | $ | (72,888) | | * |
| | | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | |
| Interest income | | | 65,529 | | | 30,462 | | | 35,067 | | * |
| Interest expense, net of amounts capitalized | | | (286,055) | | | (99,408) | | | (186,647) | | * |
| Other, net | | | 41,390 | | | (26,110) | | | 67,500 | | * |
| Total other income (expense) | | | (179,136) | | | (95,056) | | | (84,080) | | (88.5) |
| | | | | | | | | | | | |
| Income (loss) before income taxes | | | (267,268) | | | (110,300) | | | (156,968) | | * |
| Income tax (provision) benefit, net | | | 63,987 | | | 1,925 | | | 62,062 | | * |
| Effective tax rate | | | 23.9 | % | | 1.7 | % | | | | |
| Net income (loss) | | | (203,281) | | | (108,375) | | | (94,906) | | (87.6) |
| Less: Net income (loss) attributable to noncontrolling interests, net of tax | | | (612) | | | (999) | | | 387 | | 38.7 |
| Net income (loss) attributable to EchoStar | | $ | (202,669) | | $ | (107,376) | | $ | (95,293) | | (88.7) |
| * | Percentage is not meaningful. |
|---|
Interest income. “Interest income” totaled $66 million during the three months ended March 31, 2025, an increase of $35 million compared to the same period in 2024. This increase primarily resulted from higher average cash and marketable investment securities balances, partially offset by lower percentage returns earned on our cash and marketable investment securities during the three months ended March 31, 2025.
Interest expense, net of amounts capitalized. “Interest expense, net of amounts capitalized” totaled $286 million during the three months ended March 31, 2025, an increase of $187 million compared to the same period in 2024. This increase primarily resulted from interest expense related to debt issuances in the third and fourth quarters of 2024, partially offset by the redemption of debt that matured in March and November 2024 and debt tendered for exchange and cancelled in the fourth quarter of 2024. In addition, the three months ended March 31, 2025 was positively impacted by a $58 million increase in capitalized interest compared to the same period in 2024 due to a higher capitalization rate. See Note 2 in the Notes to our Condensed Consolidated Financial Statements for further information.
Other, net. “Other, net” income totaled $41 million during the three months ended March 31, 2025, compared to expense of $26 million during the same period in 2024. This change primarily resulted from a net increase in gains on marketable and non-marketable investment securities and $11 million of early debt extinguishment gains from the repurchases of our senior secured notes. See Note 5 in the Notes to our Condensed Consolidated Financial Statements for further information.
Income tax (provision) benefit, net. Our income tax benefit was $64 million during the three months ended March 31, 2025, an increase of $62 million compared to the same period in 2024. The change was primarily related to a decrease in “Income (loss) before income taxes” and the change in our effective tax rate. Our effective tax rate during the three months ended March 31, 2024 was impacted by federal, state and foreign valuation allowances.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Non-GAAP Performance Measures and Reconciliation
It is management’s intent to provide non-GAAP financial information to enhance the understanding of our financial information prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that providing these non-GAAP measures in addition to the GAAP measures allows management, investors and other users of our financial information to more fully and accurately assess both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies.
Segment OIBDA
Segment OIBDA, which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability of our business segments on a more variable cost basis as it excludes the depreciation and amortization expenses related primarily to capital expenditures and acquisitions for those business segments, as well as in evaluating operating performance in relation to our competitors. Segment OIBDA is calculated by adding back depreciation and amortization expense to business segments operating income (loss). See Note 11 to the Notes to our Condensed Consolidated Financial Statements for further information.
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the Three Months Ended March 31, 2025 | Pay-TV | Wireless | Broadband and Satellite Services | ** **Eliminations | Consolidated | ||||||||||
| | | (In thousands) | |||||||||||||
| Segment operating income (loss) | | $ | 653,430 | | $ | (722,302) | | $ | (19,195) | | $ | (65) | | $ | (88,132) |
| Depreciation and amortization | | | 76,443 | | | 307,238 | | | 104,898 | | | (246) | | | 488,333 |
| OIBDA | | $ | 729,873 | | $ | (415,064) | | $ | 85,703 | | $ | (311) | | $ | 400,201 |
| | | | | | | | | | | | | | | | |
| For the Three Months Ended March 31, 2024 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Segment operating income (loss) | | $ | 670,108 | | $ | (645,168) | | $ | (39,554) | | $ | (630) | | $ | (15,244) |
| Depreciation and amortization | | | 85,402 | | | 281,672 | | | 118,841 | | | (515) | | | 485,400 |
| OIBDA | | $ | 755,510 | | $ | (363,496) | | $ | 79,287 | | $ | (1,145) | | $ | 470,156 |
The changes in OIBDA during the three months ended March 31, 2025, compared to the same period in 2024, were primarily a result of the factors described in connection with operating revenues and operating expenses.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
GUARANTOR FINANCIAL INFORMATION
Our senior secured notes, consisting of our 10 3/4% Senior Secured Notes due 2029 and 6 3/4% Senior Secured Notes due 2030 and our 3 7/8% Convertible Secured Notes due 2030 (together, the “EchoStar Notes”), are jointly and severally guaranteed on a senior secured basis by certain of our wholly-owned subsidiaries (the “Guarantors”). The Guarantors consist of, Northstar Wireless, L.L.C., SNR Wireless LicenseCo, LLC, DBSD Corporation and Gamma Acquisition L.L.C. (the “Spectrum Assets Guarantors”) and Northstar Spectrum, LLC, SNR Wireless HoldCo, LLC, DBSD Services Limited and Gamma Acquisition HoldCo, L.L.C. the (“Equity Pledge Guarantors”).
Certain of our wholly-owned subsidiaries are designated as “Unrestricted Subsidiaries” and do not guarantee the EchoStar Notes. The guarantee of the Guarantors will be discharged and released in accordance with the terms of the applicable indenture. The rights of holders of the EchoStar Notes against the Guarantors may be limited under the U.S. Bankruptcy Code or state fraudulent transfer or conveyance law.
Each entity in the summarized combined financial information follows the same accounting policies as described in our condensed consolidated financial statements. Information for the non-Guarantor subsidiaries has been excluded from the combined summarized financial information of the obligated group. The accompanying summarized combined financial information does not reflect investments of the obligated group in non-Guarantor subsidiaries. The financial information of the obligated group is presented on a combined basis and is derived from EchoStar’s condensed consolidated financial statements; intercompany balances and transactions within the obligated group have been eliminated. The obligated group’s amounts due to non-Guarantor subsidiaries and related parties have been presented in separate line items.
The summarized balance sheet information for the combined obligor group of the EchoStar Notes is presented in the table below.
| | | | | | | |
|---|---|---|---|---|---|---|
| | | As of | ||||
| | | March 31, | | December 31, | ||
| | | 2025 | | 2024 | ||
| | | (In thousands) | ||||
| Current assets | $ | 5,433,393 | | $ | 6,234,658 | |
| Noncurrent assets | | | 17,581,060 | | | 17,397,691 |
| Current liabilities | | | 554,849 | | | 411,704 |
| Noncurrent liabilities | | | 9,211,205 | | | 9,254,862 |
| Due from non-guarantors | | | 1,571,764 | | | 1,470,067 |
The summarized results of operations information for the combined obligor group of the EchoStar Notes is presented in the table below.
| | | | |
|---|---|---|---|
| | | For the Three Months Ended | |
| | | March 31, 2025 | |
| | | (In thousands) | |
| Total revenues | $ | 164 | |
| Operating income (loss) | | | (3,823) |
| Net income (loss) | | | (55,417) |
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
LIQUIDITY AND CAPITAL RESOURCES
Cash, Cash Equivalents, Current Restricted Cash and Cash Equivalents and Current Marketable Investment Securities
We consider all liquid investments purchased with a remaining maturity of 90 days or less at the date of acquisition to be cash equivalents. See Note 5 in the Notes to our Condensed Consolidated Financial Statements for further information regarding our current restricted cash and cash equivalents and marketable investment securities. As of March 31, 2025, cash, cash equivalents, current restricted cash and cash equivalents, and current marketable investment securities totaled $5.232 billion compared to $5.698 billion as of December 31, 2024, a decrease of $466 million. This decrease in cash, cash equivalents, current restricted cash and cash equivalents and current marketable investment securities primarily resulted from capital expenditures, net of refunds, of $378 million (including capitalized interest related to regulatory authorizations), redemptions of our Term Loan due 2025 of $167 million and net repurchases of our 5 1/4% Senior Secured Notes due 2026 of $111 million, partially offset by cash generated from operating activities of $207 million.
Cash Flow
The following discussion highlights our cash flow activities during the three months ended March 31, 2025.
Cash flows from operating activities
For the three months ended March 31, 2025, we reported “Net cash flows from operating activities” of $207 million primarily attributable to $188 million of “Net income (loss)” adjusted to exclude the non-cash items for “Depreciation and amortization” expense, “Realized and unrealized losses (gains) on investments, impairments and other,” “Non-cash, stock-based compensation” expense, and “Deferred tax expense (benefit).” In addition, “Net cash flows from operating activities” was impacted by the timing difference between book expense and cash payments, including income taxes, and other working capital changes.
Cash flows from investing activities
For the three months ended March 31, 2025, we reported outflows from “Net cash flows from investing activities” of $1.657 billion primarily related to capital expenditures, net of refunds, of $378 million (including capitalized interest related to regulatory authorizations) and $1.274 billion in net purchases of marketable investment securities.
Cash flows from financing activities
For the three months ended March 31, 2025, we reported outflows from “Net cash flows from financing activities” of $332 million primarily related to redemptions of our Term Loan due 2025 of $167 million and net repurchases of our 5 1/4% Senior Secured Notes due 2026 of $111 million.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Free Cash Flow
We define free cash flow as “Net cash flows from operating activities” less: (i) “Purchases of property and equipment” net of “Refunds and other receipts of purchases of property and equipment,” and (ii) “Capitalized interest related to regulatory authorizations,” as shown on our Condensed Consolidated Statements of Cash Flows. We believe free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make investments (including strategic wireless investments), fund acquisitions and for certain other activities. Free cash flow is not a measure determined in accordance with GAAP and should not be considered a substitute for “Operating income (loss),” “Net income (loss),” “Net cash flows from operating activities” or any other measure determined in accordance with GAAP. Since free cash flow includes investments in operating assets, we believe this non-GAAP liquidity measure is useful in addition to the most directly comparable GAAP measure “Net cash flows from operating activities.”
Free cash flow can be significantly impacted from period to period by changes in “Net income (loss)” adjusted to exclude certain non-cash charges, operating assets and liabilities, “Purchases of property and equipment,” net of “Refunds and other receipts of purchases of property and equipment,” and “Capitalized interest related to regulatory authorizations.” These items are shown in the “Net cash flows from operating activities” and “Net cash flows from investing activities” sections on our Condensed Consolidated Statements of Cash Flows included herein. Operating asset and liability balances can fluctuate significantly from period to period and there can be no assurance that free cash flow will not be negatively impacted by material changes in operating assets and liabilities in future periods, since these changes depend upon, among other things, management’s timing of payments and control of inventory levels, and cash receipts. In addition to fluctuations resulting from changes in operating assets and liabilities, free cash flow can vary significantly from period to period depending upon, among other things, subscriber additions (losses), service revenue, subscriber churn, subscriber acquisition and retention costs including amounts capitalized under our equipment lease programs for DISH TV subscribers, operating efficiencies, increases or decreases in purchases of property and equipment, expenditures related to our 5G Network deployment and other factors.
The following table reconciles free cash flow to “Net cash flows from operating activities.”
| | | | | | | |
|---|---|---|---|---|---|---|
| | | For the Three Months Ended | ||||
| | | March 31, | ||||
| | 2025 | 2024 | ||||
| | | (In thousands) | ||||
| Net cash flows from operating activities | $ | 206,755 | | $ | 451,259 | |
| Purchases of property and equipment, net of refunds (including capitalized interest related to regulatory authorizations) | | | (378,484) | | | (677,696) |
| Free cash flow | | $ | (171,729) | | $ | (226,437) |
Operational Liquidity
We make general investments in property such as, among others, satellites, wireless devices, set-top boxes, information technology and facilities that support our Pay-TV, Wireless and Broadband and Satellite Services segments. For some of these investments, changes in trade policies, including, but not limited to, tariffs and other restrictions, could increase, among other things, our costs, disrupt our supply chain and negatively affect our business, operations and financial condition.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
We are also making significant additional investments and may partner with others to, among other things, continue our 5G Network deployment and further commercialize, build-out and integrate our Wireless spectrum licenses and related assets. Moreover, since we are primarily a subscriber-based company, we also make subscriber-specific investments to acquire new subscribers and retain existing subscribers. While the general investments may be deferred without impacting the business in the short-term, the subscriber-specific investments are less discretionary. Our overall objective is to generate sufficient cash flow over the life of each subscriber to provide an adequate return against the upfront investment. Once the upfront investment has been made for each subscriber, the subsequent cash flow is generally positive, but there can be no assurance that over time we will recoup or earn a return on the upfront investment.
There are a number of factors that impact our future cash flow compared to the cash flow we generate at a given point in time. The first factor is our churn rate and how successful we are at retaining our current subscribers. To the extent we lose subscribers from our existing base, the positive cash flow from that base is correspondingly reduced. The second factor is how successful we are at maintaining our service margins. To the extent our “Cost of services” grow faster than our “Service revenue,” the amount of cash flow that is generated per existing subscriber is reduced. Our Pay-TV service margins have been reduced by, among other things, higher programming costs. Our Wireless service margins are impacted by, among other things, our MNSA agreement with T-Mobile and our NSA agreement with AT&T and the speed with which we are able to migrate Wireless subscribers onto our 5G Network. The third factor is the rate at which we acquire new Pay-TV, Wireless and Broadband subscribers. The faster we acquire new subscribers, the more our positive ongoing cash flow from existing subscribers is offset by the negative upfront cash flow associated with acquiring new subscribers. Conversely, the slower we acquire subscribers, the more our operating cash flow is enhanced in that period.
Finally, our future cash flow is impacted by, among other things, the rate at which we complete our 5G Network, incur litigation expense, make cash interest payments, and any cash flow from financing activities. We anticipate operating expenditures for our 5G Network to increase for 2025 as we continue to, among other things, deploy cell sites and communication towers to continue to commercialize our 5G Network. We expect our capital expenditures may decrease in the near term. However, as we prepare for our next build-out requirement deadlines, we expect our capital expenditures to increase as we approach these deadlines. As a result, our historical cash flow is not necessarily indicative of our future cash flows. As of March 31, 2025, we experienced negative free cash flow. We expect that this trend will continue in 2025 and in future periods. In addition, declines in our Pay-TV and Wireless subscriber base and any decrease in subscriber-related margins negatively impact our cash flow, and there can be no assurance that our subscriber declines for some if not all of our segments will not continue.
Subscriber Base – Pay TV, Wireless and Broadband and Satellite Services Segments
See “Results of Operations” above for further information.
Subscriber Acquisition and Retention Costs
We incur significant upfront costs to acquire Pay-TV, Wireless and Broadband subscribers, including, but not limited to, advertising, independent third-party retailer incentives, payments made to third parties, equipment and wireless device subsidies, installation services, and/or new customer promotions. While we attempt to recoup these upfront costs over the lives of their subscription, there can be no assurance that we will be successful in achieving that objective. We employ certain business rules for acquiring subscribers, including, but not limited to, minimum credit requirements, identity verification and contractual commitments. We strive to provide outstanding customer service to increase the likelihood of customers keeping their service over longer periods of time. Our subscriber acquisition costs may vary significantly from period to period.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
We incur significant costs to retain our existing DISH TV subscribers, generally as a result of upgrading their equipment to next generation receivers, primarily including our Hopper® receivers, and by providing retention credits. As with our subscriber acquisition costs, our retention upgrade spending includes the cost of equipment and installation services. In certain circumstances, we also offer programming at no additional charge and/or promotional pricing for limited periods to existing customers in exchange for a contractual commitment to receive service for a minimum term. A component of our retention efforts includes the installation of equipment for customers who move. Retention costs for Wireless subscribers are primarily related to promotional pricing on upgraded wireless devices for qualified existing subscribers and promotional credits. Our DISH TV and Wireless subscriber retention costs may vary significantly from period to period.
Seasonality
Historically, the first half of the year generally produces fewer gross new DISH TV subscriber activations than the second half of the year, as is typical in the pay-TV industry. In addition, the first and fourth quarters generally produce a lower DISH TV churn rate than the second and third quarters. However, in recent years, as the pay-TV industry has matured, we and our competitors increasingly must seek to attract a greater proportion of new subscribers from each other’s existing subscriber bases rather than from first-time purchasers of pay-TV services. As a result, historical trends in seasonality described above may not be indicative of future trends.
Our net SLING TV subscriber additions are impacted by, among other things, certain major sporting events and other major television events. The first and third quarters generally produce higher gross new Wireless subscriber activations. The historical trends discussed above, for net DISH TV subscriber additions, net SLING TV subscriber additions and gross new Wireless subscriber activations, may not be indicative of future trends. There can be no assurance that these trends will not continue and/or accelerate.
Satellites
Pay-TV Segment. Operation of our DISH TV services requires that we have adequate satellite transmission capacity for the programming that we offer. Moreover, competitive conditions may require that we expand our offering of new programming. While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity to recover the transmission of certain critical programming, our backup capacity is limited. In the event of a failure or loss of any of our owned or leased satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as necessary to remain competitive and cause us to expend a significant portion of our cash to acquire or lease additional satellite capacity.
Broadband and Satellite Services Segment. Operation of our Broadband and Satellite Services segment also requires adequate satellite transmission capacity for the services that we offer. In the event of a failure or loss of any of our owned or leased satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of services.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Covenants and Restrictions Related to our Long-Term Debt
We are subject to the covenants and restrictions set forth in the indentures related to our long-term debt.
EchoStar Corporation
The indentures related to our outstanding EchoStar senior secured notes and convertible senior secured notes contain restrictive covenants that, among other things, impose limitations on our and certain of our subsidiaries’ ability to: (i) incur or guarantee additional indebtedness; (ii) make certain investments and other restricted payments; (iii) create liens; (iv) enter into certain transactions with affiliates; (v) merge or consolidate with another company; (vi) transfer or sell assets; (vii) allow to exist certain restrictions on paying dividends or other payments; and (viii) guarantor engagement in new activities. Should we fail to comply with these covenants, all or a portion of the debt under the senior secured notes could become immediately payable. The senior secured notes also provide that the debt may be required to be prepaid if certain change-in-control events occur. In addition, the convertible senior secured notes provide that, if a “fundamental change” (as defined in the related indenture) occurs, holders may require us to repurchase for cash all or part of their convertible notes. As of the date of filing of this Quarterly Report on Form 10-Q, we were in compliance with the covenants and restrictions related to our long-term debt.
DISH Network and DISH DBS Corporation
The indentures related to our outstanding senior notes issued by DISH DBS Corporation (“DISH DBS”) contain restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: (i) incur additional indebtedness; (ii) enter into sale and leaseback transactions; (iii) pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; (iv) make certain investments; (v) create liens; (vi) enter into certain transactions with affiliates; (vii) merge or consolidate with another company; and (viii) transfer or sell assets. The indentures related to our outstanding DISH Network and DISH DBS senior secured notes contain restrictive covenants that, among other things, impose limitations on our ability and certain of our subsidiaries to: (i) incur additional indebtedness; (ii) enter into sale and leaseback transactions; (iii) pay dividends or make distributions on our capital stock or repurchase our capital stock; (iv) make certain investments of spectrum collateral; (v) create liens; (vi) enter into certain transactions with affiliates; (vii) merge or consolidate with another company; and (viii) transfer or sell assets. Should we fail to comply with these covenants, all or a portion of the debt under the senior notes, senior secured notes and our other long-term debt could become immediately payable. The senior notes and senior secured notes also provide that the debt may be required to be prepaid if certain change-in-control events occur. In addition, the Convertible Notes provide that, if a “fundamental change” (as defined in the related indenture) occurs, holders may require us to repurchase for cash all or part of their Convertible Notes. As of the date of filing of this Quarterly Report on Form 10-Q, we, DISH Network and DISH DBS were in compliance with the covenants and restrictions related to our respective long-term debt.
Hughes Satellite Systems Corporation
The indentures related to our outstanding senior notes issued by Hughes Satellite Systems Corporation (“HSSC”) contain restrictive covenants that, among other things, impose limitations on the ability of HSSC and its restricted subsidiaries to: (i) incur additional indebtedness; (ii) pay dividends or make distributions on HSSC’s capital stock or repurchase HSSC’s capital stock; (iii) allow to exist certain restrictions on such subsidiaries’ ability to pay dividends, make distributions, make other payments, or transfer assets; (iv) make certain investments; (v) create liens; (vi) enter into certain transactions with affiliates; (vii) merge or consolidate with another company; and (viii) transfer or sell assets. As of the date of filing of this Quarterly Report on Form 10-Q, we and HSSC were in compliance with the covenants and restrictions related to our respective long-term debt.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Other
We are also vulnerable to fraud, particularly in the acquisition of new subscribers, which includes the sale of wireless devices. While we are addressing the impact of subscriber fraud through a number of actions, there can be no assurance that we will not continue to experience fraud or that any fraud we have experienced does not accelerate, which could impact our subscriber growth and churn. Economic weakness may create greater incentive for signal theft, piracy and subscriber fraud, which could lead to higher subscriber churn and reduced revenue.
Obligations and Future Capital Requirements
Contractual Obligations
See Note 10 in the Notes to our Condensed Consolidated Financial Statements for further information.
Future Capital Requirements
We expect to fund our future working capital, capital expenditures, other investments and debt service requirements for the next twelve months from cash generated from operations, existing restricted and unrestricted cash, cash equivalents and marketable investment securities balances and cash generated through raising additional capital. We do not currently have cash, cash equivalents, marketable investment securities balances and/or projected future cash flows to fully fund our 2026 debt maturities. We will need to refinance or restructure all or a portion of such obligations prior to maturity.
We may need to make significant additional investments to, among other things, continue our 5G Network deployment and further commercialize, build-out and integrate our Wireless spectrum licenses and related assets. The amount of capital required to fund our future working capital, capital expenditure and other investment needs varies and we will need to raise additional capital, depending on, among other things, the rate at which we complete our 5G Network, the potential purchase of additional wireless spectrum licenses and the rate at which we acquire new subscribers and the cost of subscriber acquisition and retention. Certain of our capital expenditures for 2025 are expected to be driven by the rate of our 5G Network deployment as well as costs associated with subscriber premises equipment. These expenditures are necessary for our 5G Network deployment as well as to operate and maintain our DISH TV services. Consequently, we consider certain of them to be non-discretionary.
Our capital expenditures vary depending on, among other things, the number of satellites leased or under construction at any point in time and could increase materially as a result of increased competition, significant satellite failures or economic weakness and uncertainty. Our DISH TV subscriber base has been declining and there can be no assurance that our DISH TV subscriber base will not continue to decline and that the pace of such decline will not accelerate. In the event that our DISH TV subscriber base continues to decline, it will have a material adverse long-term effect on our cash flow.
We have and expect to continue to incur expenditures in 2025 related to our 5G Network deployment, including, but not limited to, capital expenditures associated with our 5G Network deployment and the potential purchase of additional wireless spectrum licenses, including any potential Northstar Re-Auction Payment and SNR Re-Auction Payment for the AWS-3 licenses retained by the FCC. The amount of capital required will also depend on, among other things, our available liquidity, the growth of our Wireless segment and the levels of investment necessary to support potential strategic initiatives that may arise from time to time. These factors, including, but not limited to, a reduction in our available future cash flows as a result of our 5G Network deployment, will require us to raise additional capital in the future, which may not be available on favorable terms or at all.
**Item 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Continued
Volatility in the financial markets has made it more difficult at times for issuers of high-yield indebtedness, such as us, to access capital markets at favorable terms or at all. These developments may have a significant effect on our cost of financing and our liquidity position.
Wireless Segment – 5G Network
See Note 10 in the Notes to our Condensed Consolidated Financial Statements for further information.
Availability of Credit and Effect on Liquidity
The ability to raise capital has generally existed for us despite economic weakness and uncertainty. While modest fluctuations in the cost of capital will not likely impact our current operational plans, significant fluctuations could have a material adverse effect on our business, results of operations and financial condition.
Debt Issuances and Maturity
Term Loan Due 2025
During the three months ended March 31, 2025, we redeemed approximately $167 million of our Term Loan Due 2025. The remaining balance of approximately $333 million is paid monthly and the final payment is due September 30, 2025. We expect to fund this obligation from our current restricted and unrestricted cash, cash equivalents and marketable investment securities balances on hand and/or projected future cash flows.
5 1/4% Senior Secured Notes due 2026
During the three months ended March 31, 2025, we repurchased approximately $123 million of our 5 1/4% Senior Secured Notes due 2026 in open market trades. The remaining balance of approximately $627 million matures on August 1, 2026. We do not currently have cash, cash equivalents, marketable investment securities balances and/or projected future cash flows to fully fund our 2026 debt maturities. We will need to refinance or restructure all or a portion of such obligations prior to maturity.
New Accounting Pronouncements
See Note 2 in the Notes to our Condensed Consolidated Financial Statements for further information.
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