Satellite communications provider EchoStar Corporation (NASDAQ: SATS) on Thursday reported $501.5 million in consolidated revenue for the first quarter, a 3.9% year-over-year increase.
High equipment sales, which accounted for $82.7 million across both domestical and international markets, drove the revenue increase. Sales jumped by $30.5 million, or 58.3%, YoY.
However, that growth was partially offset by a decrease in broadband revenue from Hughes Network Systems, an EchoStar company. Consumer broadband subscriptions fell 3.8% in Q1 from the previous quarter and 9.5% YoY.
EchoStar management, in a May 4 Securities and Exchange Commission filing, claimed its consumer subscriber base was becoming increasingly limited in most parts of the U.S., where its service is nearing or has already reached capacity. The subscriber base in Latin America is similarly constrained, the company noted, while also pointing to unique circumstances in the region, where adverse economic conditions, selective customer screening and community Wi-Fi have had a negative impact on subscriptions.
EchoStar does have plans to increase its capacity, including with the planned launch of its geostationary satellite: Jupiter 3. The new satellite will provide additional capacity for the HughesNet satellite internet service in the Americas, according to the SEC filing. That launch has been delayed to Q1 2023.
“Demand for broadband remains strong on the consumer side, and EchoStar continues to manage limited capacity until J3 goes into service,” Raymond James financial analyst Ric Prentiss said in a May 4 note. “That should then allow rapid growth in subscribers as well as accelerated revenue/EBITDA growth.”
An active start to 2022
It was a busy Q1 for EchoStar: The company secured a new 5G contract with the U.S. Department of Defense (DOD); expanded its footprint in India; and former CEO and President Michael Dugan retired after 30 years with the company.
Hamid Akhavan became CEO in April.
Hughes’ new $18 million contract with the DOD includes deploying a stand-alone 5G network at Naval Air Station Whidbey Island in Washington state. Since 2020, the Pentagon has issued hundreds of millions of dollars to build 5G networks at military bases and test how the new networks and affiliated technologies can improve operations.
“Over the course of this three-year project, we will demonstrate for the U.S. Department of Defense how 5G infrastructure from Hughes — including a packet processing core, radio access, edge cloud, security and network management — can power the resilient networking necessary to transform base operations,” Rajeev Gopal, vice president at Hughes, said March 24.
Hughes’ 5G network will use spectrum from DISH Wireless.
EchoStar has continued to make inroads into the market in India. In January EchoStar formed a joint venture with Bharti Airtel Limited to offer satellite networking solutions in the country. EchoStar had been in an agreement with Bharti since May 2019 to use the company’s services and technologies for Hughes Communications India Private Limited. Under the new joint venture, EchoStar holds 67% ownership of Hughes Communications India Private Ltd. and Bharti holds 33%. Later that month, satellite communications provider OneWeb announced a six-year distribution partner agreement with the joint venture that will enable the use of OneWeb’s network of low Earth orbit satellites across India.
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