US pay-TV provider Dish Network lost nearly 1 million subscribers in 2018, as losses in its satellite business accelerated and its OTT service Sling TV signed up fewer customers. The company blamed the figures on the loss of key channels from Univision and AT&T in the second half of the year and increasing competition in the OTT market.
Dish closed 2018 with a total of 12.32 million pay-TV subscribers, down from 13.24 million a year earlier. It lost 1.125 million satellite customers, for a total of 9.90 million, and the Sling TV base grew by just 205,000, compared to net additions of 711,000 in 2017, for a total of 2.42 million at year-end. In Q4, total subscriber losses swelled to 334,000, compared to net additions of 39,000 in the year-ago quarter. Average monthly subscriber churn spread over the full year 2018 was 1.78 percent, unchanged from 2017.
Dish lost the Spanish-language channels from Univision in July as well as HBO and Cinemax from AT&T in November, and the company said in a SEC filing that the losses may be permanent. Dish said this led to more customer losses in the second half and it continues to face increased competition from more broadcasters offering their channels and content directly over the internet.
The smaller customer base led to a drop in revenues in Q4 to USD 3.31 billion from USD 3.48 billion a year earlier. ARPU was down a smaller 1.1 percent year-on-year to USD 85.46. While operating costs increased, a decline in legal fees and depreciation drove a 37 percent improvement in operating profit to USD 2.1 billion, and EBITDA was up 15.1 percent to USD 2.8 billion. Net profit declined to USD 337 million from USD 1.39 billion a year ago when Dish booked a large benefit of USD 1.2 billion from the US corporate tax reform.
After capital expenditure of USD 1.3 billion in 2018, Dish ended the year with free cash flow of USD 1.2 billion, down slightly from USD 1.4 billion in 2017.
Wireless network work continues
In a SEC filing, the company also provided an update on its plans to launch a 5G network with its spectrum holdings, focused on NB-IoT services. As of end-2018, it had entered into vendor contracts with multiple parties for, among other things, base stations, chipsets, modules, tower leases, the core network, RF design, and deployment services for the first phase. Initial RF design for the first phase is now complete, the company has secured certain tower sites, and it is in the process of identifying and securing additional tower sites. The core network has been installed and commissioned.
The first base stations were installed sites in 2018, and Dish plans to work gradually on the network in the next two years, spending USD 500 million to USD 1.0 billion on capex in the first phase through 2020. The second phase of network deployment will follow once the 3GPP Release 16 is standardized, expected in early 2020, and this network phase will cost an estimated USD 10 billion to complete.
