Dish Network Owner, After Sealing Merger, Exploring More Deal Options

Georg Szalai
·2 min read

EchoStar Corp. on Wednesday unveiled a series of “strategic transactions to further unlock incremental strategic, financial and operating flexibility for its business” following the completion of its merger with Dish Network, including the formation of a new subsidiary holding select wireless spectrum licenses. The company also said it was evaluating potential deals.

“The transactions announced today only further that objective of realizing on the synergistic capabilities of the combined company, while also providing it with optimized strategic and financing flexibility,” it said.

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Under the deals, Dish Network has transferred certain of its wireless spectrum licenses under the umbrella of a newly formed subsidiary, EchoStar Wireless Holding. Dish will continue to retain ownership of “various other valuable wireless spectrum licenses,” and Dish DBS Corp., the firm said.

Loans valued at approximately $4.7 billion have also been reassigned. Amounts owed will now be paid by Dish Network to an EchoStar subsidiary.

“This asset allocation enables EchoStar to more optimally position the necessary resources for the execution of its strategic goal of becoming the premier provider of terrestrial mobile, satellite connectivity, and content services,” said Hamid Akhavan, president and CEO of EchoStar.

EchoStar also announced that it has engaged Houlihan Lokey and White & Case LLP as financial and legal advisers, respectively, to assist it “in evaluating potential strategic alternatives,” which investors read as a signal for a potential sale or other deal for EchoStar Wireless. The stock rose in pre-market activity on the news.

But MoffettNathanson analyst Craig Moffett argued that the company could instead focus its attention on financial moves instead of any asset sale. “What seems much more likely, however, is that the moves announced this morning are a precursor to a new financing transaction, or perhaps a securitization,” the expert suggested.

“Most companies would immediately announce a conference call to explain the news, most importantly the ‘why’ behind these transactions, but EchoStar is not most companies,” he added. “In the absence of explanations from the company itself, we’re left to try to figure it out on our own.” His conclusion: “What is most important here is that the assets simply aren’t being divided up in a way that would facilitate a sale.

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