Dish loses more wireless subscribers in Q1 even though 5G expansion is on track

Dish chairman Charles Ergen has always wanted to run a wireless business. Therefore Dish spent $6.21 billion, second behind the $7.9 billion T-Mobile spentto acquire 600 MHz low band spectrum in 2017. Dish eventually played a key role in the T-Mobile-Sprint merger, helping to lubricate the wheels so the merger could gain approval from the FCC and the Department of Justice.

Dish still reports net drops in wireless subscribers

To reassure the FCC, which was concerned about the reduction in the number of major airlines from four to three (a 25% reduction), Dish pledged to replace Sprint as the country’s fourth-largest airline. As it builds out its 5G standalone network, Dish is a mobile virtual network operator (MVNO), meaning it buys wireless service wholesale from T-Mobile and AT&T and sells it to the public at retail prices.

Dish Wireless continued to lose subscribers in the first quarter

So far, Dish has had trouble retaining wireless subscribers. Dish Wireless started with the 9.3 million subscribers it gained when it closed the purchase of Sprint’s prepaid business. That deal gave Dish 7,500 stores and 400 employees. But since the deal closed, that number of customers is moving south. Last February, CEO Ergen admitted that it was his fault that the company was six months behind with the rollout of 5G.

“We are six months behind, and it is my fault,” said the director. “We just didn’t expect to do so much on the technical side.” And to make matters worse, the company is facing an FCC deadline to provide 20% of the country with its own 5G signals by next month.

And by June 14, 2023, Dish must cover at least 70% of the US population with wireless service equal to or greater than 35 Mbps, verified by a disk test. It must also have at least 15,000 5G cell sites up and running by that date. If Dish fails to meet these numbers in time, it will make a “voluntary contribution” to the US Treasury worth as much as $2.2 billion.

During the fourth quarter of 2021, Dish reported a net decline of 245,000 wireless customers. That sounds pretty bad, but admittedly it was an improvement from last year’s fourth quarter net drop of 363,000 wireless subscribers). After the fourth quarter, Dish’s wireless service was used by 8.5 million mobile phone users.

Today, Court reported that the company saw more net customer loss for its wireless division in the first quarter of 2022 with a decrease of 363,000 customers. This represents a net decline in wireless customer numbers that was more than double the decline announced by Dish Wireless in the first quarter of last year. Dish now has 8.2 million wireless subscribers and had a 5.11% churn rate during the quarter, up from 4.44% in the year-ago quarter.

Dish says wireless expansion is still on track

Following the publication of the results, during Dish’s conference call, company president Erik Carlson had good news that the rollout of the company’s wireless network is on track. The executive added that Dish had settled all outstanding issues with T-Mobile during the quarter on favorable terms. At issue was the earlier-than-expected shutdown of T-Mobile’s 3G CDMA service, which negatively impacted Boost Mobile customers that Dish acquired in the Sprint deal.

Carlson said during the conference call that the accelerated CDMA shutdown planned by T-Mobile negatively impacted Dish Wireless during the first quarter and affected its competitiveness. Dish is awaiting DOJ approval before it can officially settle its disputes with T-Mobile, including cases related to the CDMA shutdown. Dish remains optimistic that the DOJ will approve the settlement with T-Mobile soon.

As for the first goal of meeting the June 14 deadline to cover 20% of the nation with its 5G signal, Carlson said Dish is well on track to meet this goal.

Dish Network shares took a hit on Friday, falling $5.26 or 19.14% to $22.22.