- EchoStar filed an 8-K saying it’s making interest payments that were coming due this Monday and electing not to make another payment due July 1
- The move delays an imminent bankruptcy filing and signals it’s still negotiating a deal with the federal government
- According to FCC Chairman Brendan Carr, “the status quo needs to change” when it comes to the use of the nation’s airwaves
EchoStar Chairman Charlie Ergen is buying himself some more time to work out a deal with the Federal Communications Commission (FCC), making more than $500 million in debt-interest payments today and delaying an imminent potential bankruptcy filing.
The interest payment was revealed in an 8-K filing, in which EchoStar answered a couple questions that were looming over the company. For one, it doesn’t look like a bankruptcy filing is happening as soon as once thought because EchoStar is making at least one of the interest payments coming due within the next few days. For another, it’s still hoping to reach some kind of resolution with the FCC after agency Chairman Brendan Carr threatened to take away certain spectrum licenses.
But EchoStar clearly isn’t out of the woods yet. It elected not to make interest payments of about $114 million that are due on July 1, triggering another 30-day grace period. That ups the ante in what many analysts describe as a “game of chicken” that’s going on between EchoStar and the FCC. EchoStar has the cash to make its interest payments, but it’s using the threat of a bankruptcy filing as negotiating leverage with Carr. Meanwhile, Carr is threatening to take away some of Ergen’s spectrum licenses that allegedly aren’t being used.
Carr quizzed about EchoStar
Carr had a chance to weigh in on the matter during a press conference after the FCC’s open meeting on Thursday. He didn't reveal a whole lot about his actual intentions, but said he believes “the status quo needs to change” when it comes to the use of spectrum licenses.
“It's my view that right now, we are really working hard to make sure this valuable public resource of spectrum is put to use,” Carr said. “No new news to break, but I think the status quo needs to change. There’s lots of different paths forward there and all options are still on the table at the FCC.”
Asked if there’s a timeline by which the FCC needs to act, he said “soon,” without elaborating.
“We need to move quickly. I think there’s sort of a narrow window of opportunity here but the FCC still has a number of our proceedings that are sort of sitting there and we’ll see if we need to reinvigorate those or not,” he said.
What it means
In a note for investors on Friday, New Street Research policy analyst and a former FCC chief of staff Blair Levin said that based on Carr’s statements, it appears that the status quo that Carr wants to change is EchoStar’s spectrum position. “He wants to force a reallocation of spectrum from EchoStar to others,” Levin argued.
The saga kicked off on May 9, when Carr sent a letter to Ergen questioning whether EchoStar is living up to its 5G network buildout obligations and how much it’s actually using the 2 GHz spectrum band. The 2 GHz band happens to be one of many bands that Elon Musk’s SpaceX would like to use for satellite-based communications.
The FCC subsequently opened formal proceedings to study these issues, but it hasn’t issued a final decision.
During Thursday’s press conference, Carr was asked about a meeting that reportedly took place with President Donald Trump and Ergen at the White House earlier this month. “I don’t make a habit of disclosing the content of conversations with the president,” Carr replied.
Carr was also asked about another major development in the wireless industry: the launch of Trump Mobile, an MVNO that’s using T-Mobile’s network. He said he learned about Trump Mobile the way most people did – through the press release.
“We’re going to run our normal process if there’s anything that needs to be done by the FCC on that,” he said. Separately, “I think competition is a good thing.”
In his note, Levin said he’s not sure that’s technically a Freudian slip, “but we do find it amazing, as a matter of Wall Street analysis, that one could view Trump Mobile as contributing to competition but dismiss EchoStar as irrelevant to competition.”