- Analysts said that Dish should have the cash to hit the 80% 5G coverage target by the end of the year
- Vendors will probably still be cautious about Dish
- New Street Research noted that the venture is funded for three years if the deal is approved
Analysts say that the immediate $2.5 billion in funding for Dish will be crucial in clearing the way for the nascent 5G operator to continue with its open radio access network (RAN) build and pay its suppliers.
Dish is getting this lifeline from DirecTV and TPG credit unit Angelo Gordon as part of DirecTV’s debt buyout of Dish’s satellite TV business announced yesterday. “They’re going get that even if the deal doesn’t happen,” said Earl Lum, founder of EJL Wireless.
The 80% target
To be sure, $2 billion of that will be eaten up tout suite as Dish’s November bond comes to fruition. That leaves $500 million for Dish and parent company EchoStar to use to pay 5G suppliers as the operator stretches to reach its promised 80% national 5G coverage target by the end of the year, Lum noted.
Daryl Schoolar, analyst at Recon Analytics, said that the Dish 5G network was meeting somewhere between 70% and 80% of the coverage goal at the moment. Lum imagined that Dish will need to pay up to $10 million to hit and pass its 80% coverage target by the end of the year. So this would be comfortably within its $50 million pocket of spare cash.
Dish 5G suppliers like Samsung, Fujitsu, CommScope, Mavenir and many more will likely be happy about a steady cash influx. Many suppliers are facing a tough time in the wider wireless infrastructure world, so they still may be cautious about extending too much credit to operators like the Dish/EchoStar combo.
Even with the debt funding deal, “EchoStar is not swimming in cash and they’re burning it every quarter,” Lum noted.
Despite this, New Street Research said in an analyst note that EchoStar will be fully funded for the next three years if the DirecTV deal successfully passes its shareholders and regulators. If the company can’t build a successful wireless business within the next three years, the analysts noted, they will be free to divest spectrum.