Horrid Q3 earnings report could hasten a bankruptcy filing from Dish says analyst

According to Bloomberg, shares of Dish Network hit a 25 year low today after releasing a terrible third-quarter earnings report. The company, whose Dish Wireless unit has been selected to be the nation's "fourth nationwide facilities-based network competitor" replacing Sprint, lost 26 cents a share during the three-month period that ended at the end of September. This was much worse than the 6 cents per share loss that Wall Street analysts were expecting.

Analysts at securities firm MoffettNathanson LLC told clients that the third-quarter earnings report was bad and added that "The overwhelming probability here has always been that Dish would enter bankruptcy sometime in the next few years. Today’s results likely accelerate that." Revenue, at $3.7 billion for the quarter, also failed to meet analysts' expectations of $3.8 billion. Dish shares closed Monday at $3.44 down $2.05 or 37.43%. The 52-week high is $17.49.

Some of the red ink illustrates the difficulties Dish faces as it looks to compete in the wireless industry. Bloomberg Intelligence Senior Analyst John Butler said that the poor results show how hard it is to take on the heavyweights in the sector such as Verizon, T-Mobile, and AT&T. Butler noted that the upcoming merger with EchoStar could give Dish the financial wherewithal to complete the stand-alone 5G network it is building, but won't help it with the challenges it faces from the other major carriers. And with Dish carrying $20 billion in debt, there isn't much room for Dish to make any mistakes in wireless.

During the third quarter, Dish lost 225,000 retail wireless customers. Wall Street expected a much smaller loss of 46,000. Dish Wireless now has 7.5 million subscribers which means it has lost 1.8 million customers since it started offering wireless service.

While the EchoStar merger is expected to close by the end of the year, Dish also raised some cash by selling the rights to some spectrum in Puerto Rico and the U.S. Virgin Islands to Liberty Latin America Ltd. The latter also bought 120,000 prepaid customers in those markets from Dish in exchange for cash and international roaming credits.

Last month Dish paid T-Mobile $100 million to extend Dish's option to buy the license on 13.5MHz of 800MHz low-band spectrum for $3.59 billion. The option originally expired last April 1st but was extended a few months. Now that Dish paid T-Mobile $100 million, which is being considered an upfront payment toward the $3.59 billion purchase price, Dish has until April 1, 2024, to exercise the option and make the final payment to T-Mobile.