Echostar, the parent company of Dish Network and Sling TV, is preparing a Chapter 11 bankruptcy filing on the intent of shielding its wireless licenses from federal regulators, according to a report.
The bankruptcy filing comes amid a review initiated by the Federal Communications Commission (FCC) this month, which is scrutinizing Echostar’s spectrum for wireless and satellite-based operations.
Last week, FCC Chairman Brendan Carr notified Echostar Chairman and co-Founder Charlie Ergen that the agency was investigating the company’s compliance with building out a nationwide 5G network.
The promises were made by Dish Wireless, which operated as a subsidiary of Dish, prior to Dish’s merger with Echostar last year. As Dish Wireless, the company acquired the business of Boost Mobile and associated wireless spectrum with the promise of developing a wireless network that would rival T-Mobile, AT&T and Verizon. (Boost was previously owned by Sprint, which merged with T-Mobile several years ago.)
Dish has spent a significant amount of time and money on the development of the network. Publicly, the company has affirmed meeting key deadlines and marked numerous milestones; currently, Dish says its wireless network reaches millions of Americans.
But Carr is concerned that Dish has run afoul of its terms by not offering broader access to its wireless services, particularly in underserved parts of the country.
“The FCC structured the build-out obligations to prevent spectrum warehousing and to ensure that Americans would gain broader access to high-speed wireless services, including in underserved and rural areas,” Carr wrote in his letter to Ergen earlier this month.
Earlier this week, Echostar deliberately missed a $500 million payment to its creditors. In a regulatory filing, executives said the FCC’s investigation had “effectively frozen our ability to make decisions” about its businesses, including Dish Wireless and Boost Mobile.
A bankruptcy filing would insulate some of Echostar’s assets, including its wireless licenses. But it also opens the door for Echostar to face a fire sale of certain assets — including its wireless spectrum and pay TV businesses — in order to satisfy its debt obligations, if a court orders it.
The Wall Street Journal was the first to report on Echostar’s possible bankruptcy filing.
