EchoStar Financial Model

• Total assets: Approximately $35 billion to $45 billion (post-2025 impairments).
• Key asset categories: Wireless spectrum licenses (the most valuable asset class, held as indefinite-lived intangibles), property and equipment (satellites, 5G towers), and cash.
• Goodwill & intangibles as % of total assets: Historically over 60%, though significantly reduced following the 2025 impairment charges.
• Working capital profile:
• DSO: 15 to 25 days.
• DIO: 10 to 20 days (primarily wireless handsets).
• DPO: 45 to 60 days.
• Net working capital as % of revenue: Typically negative.
• Is working capital positive or negative? Negative. The company collects subscription revenue upfront or within the month but delays payments to programmers and equipment vendors.
• PP&E: Consists of geostationary satellites (15-year useful lives) and 5G network infrastructure.
• Right-of-use assets: Material, representing long-term leases for cell tower space to host 5G antennas.

• Capex as % of revenue: 10% to 20% historically, driven by the FCC-mandated 5G network buildout.
• Maintenance capex vs. growth capex: 20% maintenance (IT, customer premises equipment) versus 80% growth (5G network deployment, new satellites).
• Major capex programmes underway: The Open RAN 5G network buildout to meet FCC population coverage milestones.
• Capitalised software / development costs: Material for the cloud-native 5G network core.
• M&A pattern: Transformational. The DISH merger in 2023 and the pending DIRECTV divestiture fundamentally alter the corporate structure.

• Total debt: Excess of $20 billion.
• Debt/EBITDA ratio: Highly elevated, often exceeding 8.0x on a consolidated basis.
• Credit rating: Non-investment grade (high yield), with ratings frequently under pressure due to refinancing risks.
• Key debt instruments: Senior secured notes, senior unsecured notes, and convertible bonds.
• Maturity profile: A critical issue. The company faces massive near-term maturity walls requiring constant liability management exercises and debt exchanges.
• Interest rate profile: Predominantly fixed-rate high-yield bonds, with a high weighted average cost of debt (often 8% to 10%+).
• Covenants: Complex restricted payment covenants. The company frequently moves assets (like unencumbered spectrum) between restricted and unrestricted subsidiaries to facilitate new borrowing.
• Share repurchase programme: Inactive. Capital is preserved for network buildout and debt service.
• Dividend policy: No dividend.

• Operating cash flow conversion: Weak. High interest expense consumes a massive portion of operating profit.
• Free cash flow margin: Historically negative due to the 5G buildout, though management targeted positive free cash flow for year-end 2024.
• Major non-cash items: $17.63 billion impairment in 2025, massive D&A, and non-cash gains on debt extinguishment ($689 million in 2024).
• Working capital cash flow impact: Declining subscriber bases lead to working capital unwinding, which acts as a use of cash.
• Capex intensity: Extremely high, though expected to taper as the 5G network reaches mandated coverage thresholds.
• Cash tax rate vs. GAAP effective tax rate: Cash taxes are minimal due to massive accumulated net operating losses (NOLs) and accelerated depreciation on network assets.

1. Assumptions & Scenarios: Hardcoded drivers for subscriber additions, ARPU, churn, and macroeconomic inputs.
2. Subscriber Build: Roll-forward schedules (Beginning + Gross Adds - Disconnects = Ending) for DISH TV, Sling TV, Retail Wireless, and Broadband.
3. Revenue Build: Segment-level revenue calculations multiplying average subscribers by ARPU, plus equipment and enterprise revenue.
4. Operating Costs & OIBDA: Segment-level OIBDA build, detailing programming costs, SAC, and network operations.
5. Income Statement: Consolidated GAAP view, heavily featuring D&A and impairment lines.
6. Balance Sheet: Detailed tracking of spectrum intangibles, PP&E, and complex debt silos.
7. Cash Flow Statement: Direct link from Net Income, adjusting for massive non-cash impairments and debt exchange gains.
8. Debt & Interest Schedule: Siloed debt schedules (DBS, Network, EchoStar) tracking tranches, maturities, and intercompany receivables.
9. Spectrum Valuation (SOTP): A sum-of-the-parts valuation sheet pricing EchoStar's spectrum portfolio (AWS-4, 600 MHz, 700 MHz, C-Band) on a $/MHz-POP basis.
10. DCF Valuation: Unlevered free cash flow build and WACC calculation for the operating business.

1. `Pay-TV Revenue = Average Pay-TV Subscribers x Pay-TV ARPU x 12`
2. `Retail Wireless Revenue = Average Wireless Subscribers x Wireless ARPU x 12`
3. `Broadband Revenue = Average Broadband Subscribers x Broadband ARPU x 12`
4. `Pay-TV Average Subscribers = (Beginning Pay-TV Subs + Ending Pay-TV Subs) / 2`
5. `Pay-TV Disconnects = Beginning Pay-TV Subs x Average Monthly Churn Rate x 12`
6. `Retail Wireless Gross Adds = Retail Wireless Disconnects + Net Wireless Subscriber Additions`
7. `Total Segment OIBDA = Pay-TV OIBDA + Retail Wireless OIBDA + Broadband OIBDA`
8. `Consolidated Operating Income = Total Segment OIBDA - Depreciation and Amortisation - Impairments`
9. `Interest Expense = Sum of (Average Debt Balance per Tranche x Applicable Interest Rate)`
10. `Spectrum Value = Total MHz x US Population x Estimated Price per MHz-POP`

The Subscriber Build is the foundational sheet. It feeds directly into the Revenue Build, which in turn drives the Operating Costs & OIBDA sheet (since programming costs and SAC are tied to subscriber volumes). The OIBDA sheet feeds the Income Statement. The Income Statement generates Net Income, which starts the Cash Flow Statement. The Cash Flow Statement determines the cash available for debt service, feeding the Debt & Interest Schedule. The interest expense calculated there loops back to the Income Statement. This creates a circular reference between interest expense, net income, cash balances, and debt paydown, requiring a circuit breaker toggle.

• Income Statement: Revenue is positive. All expenses (COGS, SG&A, D&A, Interest) are negative. Net Income is the sum of these items.
• Balance Sheet: Assets are positive. Liabilities and Equity are positive. Total Assets must equal Total Liabilities plus Equity.
• Cash Flow Statement: Net Income is pulled with its native sign. Non-cash expenses (D&A, impairments) are positive (add-backs). Increases in assets are negative; increases in liabilities are positive.
• Subscriber Build: Gross additions are positive. Disconnects/churn are negative.

1. Debt Silo Commingling: EchoStar operates with strict debt silos (DBS vs. Network). Modelling debt as one consolidated revolver will fail to capture restricted payment covenants and default risks.
2. Ignoring the DIRECTV Transaction: The pending sale of DISH DBS to DIRECTV requires a pro-forma toggle to move Pay-TV revenue and associated DBS debt into "Discontinued Operations".
3. Spectrum Asset Transfers: The company frequently transfers unencumbered spectrum to unrestricted subsidiaries (e.g., EchoStar Wireless Holding L.L.C.) to raise new debt. The model must track unencumbered versus encumbered assets.
4. Impairment Distortion: The $17.63 billion impairment in 2025 heavily distorts historical net income and asset bases. Valuation must rely on OIBDA and cash flow, not GAAP EPS.
5. Non-Cash Debt Exchange Gains: The $689 million gain in 2024 from debt exchanges flatters net income but provides no operating cash. This must be stripped out of adjusted metrics.
6. Subscriber Definition Changes: In 2025, the company removed 60,000 paused wireless subscribers and changed Sling TV calculations. Historical subscriber metrics require normalisation.
7. Capitalised Interest: A portion of interest expense is capitalised during the 5G network build. Failing to account for this will overstate IS interest expense and understate PP&E additions.
8. ACP Subsidy Loss: Historical wireless ARPU and churn were artificially supported by the Affordable Connectivity Programme. Forward assumptions must exclude this benefit.

1. "Total Assets = Total Liabilities + Equity" in every period.
2. "Consolidated OIBDA Margin should remain between 10% and 15%; flag if outside this band."
3. "Pay-TV Churn should be modelled between 1.3% and 1.6% monthly; flag if lower than historical minimums."
4. "Debt/OIBDA must be calculated on a siloed basis; flag if DBS silo leverage exceeds covenant thresholds."
5. "Capex should step down materially post-2025 as the FCC 70% 5G coverage mandate has been met."
6. "Free Cash Flow must reconcile exactly to the change in cash on the balance sheet minus debt raised/repaid."
7. "Spectrum valuation per MHz-POP should not exceed recent FCC auction benchmarks (typically $0.50 to $1.50 depending on the band)."

• Filings: EchoStar Investor Relations website (ir.echostar.com) for the 2025 10-K, 10-Qs, and quarterly trended subscriber schedules.
• Peers for Benchmarking: T-Mobile (TMUS), AT&T (T), Verizon (VZ) for wireless metrics; DIRECTV (private) and Comcast (CMCSA) for Pay-TV metrics; Viasat (VSAT) for satellite broadband.
• Industry Data: FCC spectrum auction results and U.S. population data for SOTP spectrum valuation.
• Consensus Estimates: Bloomberg or FactSet for OIBDA and free cash flow consensus.
• Proprietary Data: MoffettNathanson equity research for telecom sector subscriber trends and spectrum valuation benchmarks.

• EchoStar Announces Financial Results for the Three and Twelve Months Ended December 31, 2025 (PR Newswire / EchoStar IR)
• DISH Network Corporation and EchoStar Corporation to Combine (August 2023 Announcement)
• 2024 Annual Report - EchoStar Corporation (Form 10-K)
• EchoStar Announces Financial Results for the Three and Twelve Months Ended December 31, 2024
• EchoStar Corporation Unlocks Incremental Strategic, Financial and Operating Flexibility (January 2024 Spectrum Transfer)
• EchoStar Announces Financial Results for the Three Months Ended March 31, 2025
• EchoStar Earnings Trended Charts - 2025.Q4