EchoStar Corporation (SATS) Earnings

Management highlights

### Hughes Corporation Bankruptcy Filing - Hughes Corporation filed for Chapter 11 bankruptcy on the morning of the call after failing to reach a viable restructuring agreement for its upcoming $1.5 billion bond maturity, with the filing limited only to Hughes domestic entities; Echostar Corporation, other non-Hughes subsidiaries, and Hughes international entities are not included in the bankruptcy. - Management has filed first aid motions with the court to enable Hughes to continue normal business operations, including paying employees, serving customers and partners, and honoring vendor commitments. The duration of the restructuring process is uncertain, and no additional questions on the bankruptcy will be addressed during the call. ### Capital Structure and Capital Allocation Philosophy - The Echostar board increased the company's share repurchase authorization to $5 billion, up from the prior level. Management follows a tiered approach to capital allocation: first priority is investment in existing core businesses, followed by evaluating external opportunities via Echostar Capital, then share repurchases, and finally dividends as the lowest priority. - After closing the AT&T transaction and setting aside $2.4 billion in escrow for mandated network shutdown costs required by the FCC, Echostar holds approximately $14 to $15 billion in total cash. Excluding Hughes, the company has ~$5 billion in existing debt, with an additional ~$8 billion in debt that will be paid off at the closing of the SpaceX transaction, and $1.9 billion in in-the-money convertible debt that is expected to convert to equity, leaving the company cash-rich with low net debt. ### Organizational and Strategic Shifts - Echostar Capital has been folded into the corporate development arm of the company under the leadership of Tom Cullen, resulting in improved operational efficiency and faster decision-making, with no change to the underlying investment philosophy from prior guidance. - Management is pursuing an internal company restructuring to pivot toward leveraging artificial intelligence, as the company was not originally built for AI-enabled operations. Long-term success will depend on how effectively the company adapts to this paradigm shift. ### Spectrum Position - The company maintains a solid remaining spectrum portfolio including AWS3, CBRS, and 700 megahertz assets. A waiver request has been filed with the FCC to extend build-out deadlines for remaining licenses, enabling the company to monetize these assets, and management is awaiting a decision on the waiver. ### Boost Mobile Strategic Update - Boost Mobile has seen flat performance (treading water) over the past four years, with management acknowledging it has not yet hit desired performance targets. New leadership has been in place for 4-5 months, implementing a new strategic approach to reinvigorate the business, and contract terms provide sufficient flexibility for potential M&A or partnership activity to improve performance. All business units are required to generate long-term profits to continue operating.

Guidance

• Management reaffirms its prior estimate that total costs for wireless network termination and associated tax liabilities from the SpaceX transactions remain in the $5 to $7 billion range, which already accounts for the $2.4 billion escrowed for network shutdown, potential 1033 tax reduction provisions, and the current higher market valuation of SpaceX. This range is management's best estimate given current variables, though the final figure could be slightly higher or lower. The DISH Wireless bankruptcy confirmation hearing is scheduled for October 13, 2026, and management expects the wireless bankruptcy process to conclude in Q4 2026.

Segment performance

No segment-level financial performance data (including absolute revenue figures or revenue contribution percentages) was disclosed in this earnings call transcript. Limited operational commentary notes that Boost Mobile was slightly cash positive in Q2 2026 but experienced subscriber losses, and the traditional video business continues to generate positive cash flow. No additional financial metrics for any product or business segment were provided.

Risks & headwinds

• The Chapter 11 restructuring process for Hughes is unpredictable, and litigation associated with the process could extend the timeline for emergence from bankruptcy. Litigation from infrastructure tower companies related to the DISH Wireless bankruptcy has already extended the restructuring timeline, as litigation reduces incentives for negotiated settlements and requires court resolution that is out of management's control. There is uncertainty around FCC approval of the requested spectrum waiver, and a denial could impact the company's ability to monetize its remaining spectrum holdings. Management notes current public market valuations are near historical highs across most metrics, creating a frothy market environment that increases risk of overpaying for external acquisitions or new investments. The large portion of Echostar's net asset value tied to SpaceX means any significant decline in SpaceX's valuation would have a material impact on Echostar's market value. Bond indentures include contractual restrictions that currently limit Echostar's ability to execute open market share repurchases. Management acknowledges it has not yet achieved desired performance levels for the Boost Mobile wireless business, and there is no guarantee new strategic initiatives will succeed. There is uncertainty around the final outcome of tax liabilities related to the SpaceX transaction, as the final amount depends on multiple variable factors including final SpaceX valuation, litigation outcomes, and tax structuring options.

Analyst Q&A

• Q: Echostar trades at a steep discount to its net asset value, and now has new capital from the AT&T transaction. Why not initiate immediate share repurchases, and what are the capital priorities? /

  A: The board raised the total buyback authorization to $5 billion to maintain flexibility for future opportunities, not to signal immediate repurchases. The company follows a tiered capital allocation approach that prioritizes investment in existing core businesses first, then external opportunities via Echostar Capital, followed by share repurchases and dividends. Bond indentures currently impose restrictions on open market common share repurchases, though there are no restrictions on buying convertible debt if that becomes an attractive option. Management takes a long-term, conservative approach to capital and prioritizes long-term shareholder value over short-term market expectations. Total capital flexibility is maintained, and decisions will be made prudently as opportunities arise.

• Q: The implied valuation of SpaceX is much higher than when the original transaction agreements were signed. What is the current expected total tax liability, and are you pursuing any tax mitigation strategies? /

  A: Management's best current estimate for total network termination costs and tax liabilities from the SpaceX transaction remains $5 to $7 billion, which already accounts for potential tax mitigation tools like 1033 exchanges, variable SpaceX valuations, and ongoing litigation over network termination costs. The final amount could come in slightly higher or lower than this range, and management is actively evaluating all available options to minimize tax liability.

• Q: How do you view the potential for combining DISH DBS with DirecTV, and would you be open to being the acquirer? /

  A: Management has long viewed a combination of the two businesses as inevitable, though synergies are lower now than they would have been in prior years. There are no preconceived notions about the structure of a potential combination: management is open to being a buyer, seller, or pursuing a joint structure, provided the valuation makes sense for shareholders. DISH is currently investing in long-term customer relationship improvements that temporarily pressure near-term EBITDA, and any combination would need to align with long-term value creation goals.

• Q: Is Echostar prohibited from bidding in upcoming C-band spectrum auctions or pursuing secondary market spectrum transactions? /

  A: Final auction rules have not been released, but management does not expect any regulatory prohibition on participating in upcoming auctions. Whether participation makes strategic and financial sense given the company's current position has not yet been determined. Management would evaluate any secondary market spectrum purchase if it strategically enhances existing assets and creates shareholder value.