Making its first quarterly earnings call as a satellite TV outfit pivoting away from pay TV and into the competitive U.S. wireless business, Dish Network reported some better-than-expected pay TV subscriber numbers.
Notably, its moribund satellite TV operation lost only 79,000 users in the quarter—far fewer than the more than 300,000 expected by analysts. According to Cowen analyst Gregory Williams, discounts luring fleeing DirecTV customers outweighed the impact of a prolonged carriage battle with AT&T over HBO.
“Clearly, the HBO/Game of Thrones headwinds had less of an impact, while Dish seems to be also enjoying some level of DirecTV share stealing,” Williams wrote in a note to investors this morning.
Meanwhile, Sling TV added 48,000 users at a time when a number of its vMVPD competitors are shrinking. Again, Williams--who had predicted gains of only around 15,000 users--ascribed this growth to “aggressive promos.”
Revenue for Dish slid to $6.4 billion in the second quarter vs. $6.92 billion in the same quarter of 2018. Dish ended the second quarter with 12.03 million total pay TV subscribers, including 9.56 million Dish TV subscribers and 2.47 million Sling TV subscribers.
On Friday, the U.S. Department of Justice agreed to let Dish help facilitate the merger of the No. 3 and No. 4 U.S. wireless companies—T-Mobile essentially set Dish up as the No. 4 wireless company in exchange for the Justices Department allowing its $26 billion purchase of Sprint.
For around $5 billion, Dish received spectrum, T-Mobile’s Boost Mobile pre-paid wireless operation, which has 9 million users, and MVNO access to the T-Mobile wireless network for the next seven years. Dish will now commit to building out its own 5G wireless network infrastructure—a task it said will cost around $10 billion, although analysts suspect it’ll be much more expensive than that.
“I certainly am willing to put more money in this company because that’s what it takes to,” Ergen told investors during Monday’s afternoon earnings call.
Virtualization, he said, will allow Dish to build out its network over time and meet a budget that—compared to the costs of rival buildouts—seems really low.
“In fact, an RFI and an RFP was released today by Dish regarding the 5G network,” Ergen said. “It’s a very cloud-centric approach, it embraces the mentality of virtualization from the ground up. And so, we believe that the CapEx and OpEx that we’ll get to in a cloud-native 5G standalone network will be very attractive.