DISH Network Corp. executives are hoping that the launch of its Las Vegas 5G network will be the beginning of a new era for its struggling consumer businesses.
On May 4, DISH launched its Las Vegas 5G network, also known as Project Genesis, to all of its customers. The network experienced a series of delays caused by regulatory issues and supply chain delays in 2021.
DISH expects to transition Project Genesis into retail brands to compete across the various segments of the market after it analyzes initial user data.
"With Project Genesis, we've been in beta user mode for most of the first quarter," DISH President John Swieringa said. "We're looking to attract sort of grassroots users, early access users who can give us feedback on the network and are doing that quite regularly."
Though the Las Vegas project represents a major growth opportunity, DISH's subscriber numbers are falling. Retail wireless net subscribers decreased by approximately 343,000 in the first quarter, compared to a net decrease of 161,000 in the year-ago quarter. DISH ended the quarter with 8.2 million retail wireless subscribers.
Net pay-TV subscribers decreased by approximately 462,000 in the first quarter, compared to a decrease of approximately 230,000 in the year-ago quarter. The company closed the quarter with 10.2 million pay-TV subscribers, including 7.99 million DISH TV subscribers and 2.3 million SLING TV subscribers.
MoffettNathanson analysts said DISH's rapidly declining subscriber numbers and negative EBITDA are dragging down the company's outlook.
"Rising interest rates and flagging patience with long-dated investment stories make for a tough backdrop for a company like Dish; Dish's fledgling 5G wireless network business is nothing if not a long-dated speculative story," MoffettNathanson analyst Craig Moffett wrote in a research note.
DISH Executive Chairman Charlie Ergen said DISH continues to have a strong relationship with mobile virtual network operator partner AT&T Inc., but DISH's ongoing CDMA cutoff battle with T-Mobile US Inc. continues to have a financial impact on DISH. DISH and T-Mobile had been at odds over T-Mobile's decision to shut down Sprint's old 3G CDMA network as T-Mobile shifts toward 4G LTE and even 5G. The shutdown began March 31 and is set to be complete by May 31.
"There's just a lot of expense that we didn't expect there and a lot of focus on operational things that our management team has had to deal with that we [did not foresee]," Ergen said.
Revenue totaled $4.33 billion for the quarter, compared to $4.50 billion for the year-ago-period.
Net income attributable to DISH was $433 million for the quarter, or 68 cents per share, down from $630 million, or 99 cents per share, in the year-ago period.
The S&P Capital IQ consensus estimate for EPS in the fourth quarter was 75 cents on a normalized basis.
DISH executives told analysts on its May 6 call that more details on DISH's wireless strategy will be shared at its analyst day May 10.
"It's become clear that they will disproportionately target the business and wholesale segments, with a particular focus on private networks," Moffett said. "Their commitment to retail has been much less clear."
Shares of DISH closed at $22.22 on May 6, down more than 19% from close May 5.
